Form 8-K
8-K — Sadot Group Inc.
Accession: 0001731122-26-000952
Filed: 2026-07-17
Period: 2026-07-14
CIK: 0001701756
SIC: 5810 (RETAIL-EATING & DRINKING PLACES)
Item: Entry into a Material Definitive Agreement
Item: Completion of Acquisition or Disposition of Assets
Item: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
Item: Unregistered Sales of Equity Securities
Item: Material Modifications to Rights of Security Holders
Item: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Item: Other Events
Item: Financial Statements and Exhibits
Documents
8-K — e7788_8k.htm (Primary)
EX-3.1 — EXHIBIT 3.1 (e7788_ex3-1.htm)
EX-4.1 — EXHIBIT 4.1 (e7788_ex4-1.htm)
EX-4.2 — EXHIBIT 4.2 (e7788_ex4-2.htm)
EX-10.1 — EXHIBIT 10.1 (e7788_ex10-1.htm)
EX-10.2 — EXHIBIT 10.2 (e7788_ex10-2.htm)
EX-10.3 — EXHIBIT 10.3 (e7788_ex10-3.htm)
EX-10.4 — EXHIBIT 10.4 (e7788_ex10-4.htm)
EX-10.5 — EXHIBIT 10.5 (e7788_ex10-5.htm)
EX-10.6 — EXHIBIT 10.6 (e7788_ex10-6.htm)
EX-10.7 — EXHIBIT 10.7 (e7788_ex10-7.htm)
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported): July
14, 2026
SADOT
GROUP INC.
(Exact name of registrant as specified in its charter)
Nevada
001-39223
47-2555533
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification No.)
295 E. Renfro Street, Suite 300
Burleson, Texas 76028
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area
code: (832) 604-9568
Not Applicable
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, $0.0001 par value
SDOT
The Nasdaq Capital Market
Indicate by check mark whether the registrant is an
emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
Acquisition of TradeIQ Intellectual Property Assets
On July 14, 2026 (the “Contract Date”),
Sadot Group Inc. (the “Company”) entered into an Intellectual Property Purchase Agreement (the “IP Purchase Agreement”)
with Litial Ltd, a private company limited by shares organized under the laws of the Hong Kong Special Administrative Region of the People’s
Republic of China (the “Seller”), pursuant to which the Company agreed to acquire from the Seller all right, title and interest
in and to certain software, source code, models, model weights, training data sets, data pipelines, technical documentation and related
intellectual property marketed under the name “TradeIQ,” consisting of a predictive-intelligence software layer designed to
operate alongside commodity trading and risk management (“CTRM”) platforms (the “Purchased IP”).
The aggregate purchase price for the Purchased IP
is US$6,000,000, payable as follows: (i) a cash component of US$50,000, payable in two tranches of US$30,000 upon execution of the IP
Purchase Agreement and US$20,000 on the date that is twenty-one (21) calendar days after the Contract Date, subject to the Seller’s
completion of delivery of the Purchased IP; (ii) 200,000 newly issued shares of the Company’s common stock, par value $0.0001 per
share (the “Common Stock”) (such shares, the “Consideration Shares”), valued for purposes of the IP Purchase Agreement
at US$10.00 per share, or US$2,000,000 in the aggregate; and (iii) 3,950 newly issued shares of a new series of preferred stock of the
Company designated as the Series C Non-Voting Non-Convertible Preferred Stock, par value $0.0001 per share (the “Series C Preferred”),
with a stated value of US$1,000 per share, or US$3,950,000 in aggregate stated value (the “Preferred Consideration Shares”).
The IP Purchase Agreement contains customary representations,
warranties and covenants of the parties, including representations of the Seller regarding title to and non-infringement of the Purchased
IP, clean-room development, open-source software, contributor assignments and sanctions compliance, as well as mutual indemnification
provisions subject to a basket and cap, with customary carve-outs for fundamental and intellectual-property representations and fraud.
The Seller has agreed to provide transition services for ninety (90) days following delivery and is subject to a two-year non-competition
covenant with respect to the CTRM market. The Seller is required to complete delivery of the Purchased IP within twenty-one (21) calendar
days after the Contract Date.
The Consideration Shares and the Preferred Consideration
Shares are subject to transfer restrictions under the IP Purchase Agreement, including a 180-day lock-up following the closing and, thereafter,
a daily leak-out limitation on sales of Consideration Shares tied to the trading volume of the Common Stock. The IP Purchase Agreement
further provides that the Company will not issue shares of Common Stock thereunder in excess of 19.99% of the shares outstanding immediately
prior to the Contract Date unless stockholder approval is obtained in accordance with applicable Nasdaq listing rules, and the parties
acknowledged that the 200,000 Consideration Shares are expected to be below that threshold. The Series C Preferred is non-voting and non-convertible
at issuance, as described under Item 5.03 below.
The foregoing description of the IP Purchase Agreement
does not purport to be complete and is qualified in its entirety by reference to the full text of the IP Purchase Agreement, a copy of
which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference. The IP Purchase Agreement is
not intended to provide any other factual information about the Company or the Seller; the representations, warranties and covenants contained
therein were made only for purposes of the IP Purchase Agreement, as of specific dates, solely for the benefit of the parties thereto,
and may be subject to limitations agreed upon by the parties.
Senior Secured Convertible Note Financing
On July 16, 2026, the Company entered into a Securities
Purchase Agreement (the “Note Purchase Agreement”) with a certain institutional investor (the “Buyer”), pursuant
to which the Company agreed to issue and sell to the Buyer senior secured convertible notes of the Company in the aggregate original principal
amount of up to $100,000,000 (the “Notes”) at a purchase price of $900 per $1,000 of principal amount.
The Note Purchase Agreement provides for the issuance
of the Notes in one or more closings, consisting of (i) an initial closing of Notes in the aggregate original principal amount of up
to $4,000,000 (the “Initial Notes”), subject to the satisfaction or waiver of certain conditions, (ii) a second closing of
Notes in the aggregate original principal amount of up to $1,000,000, subject to the Company obtaining stockholder approval for certain
matters, the effectiveness of a registration statement covering the resale of all of the shares of Common Stock issuable upon the conversion
or otherwise pursuant to the terms of the Initial Notes, and the satisfaction or waiver of certain other conditions and (iii) one or
more additional closings of Notes in the aggregate original principal amount of up to $2,000,000 for any individual additional closing
and up to $95,000,000 in the aggregate for all such additional closings, at the option of the Company subject to the satisfaction or
waiver of certain conditions, including, but not limited to, a minimum of 30 trading days passing since the later of the immediately
prior closing pursuant to the Note Purchase Agreement and the effective date of a registration statement registering for resale the shares
of Common Stock issuable upon the conversion or otherwise pursuant to the terms of the Notes issued in the immediately prior closing,
minimum trading liquidity requirements, the effectiveness of the registration statement related to the resale of the shares of Common
Stock issuable upon the conversion or otherwise pursuant to the terms of such Notes, limits on outstanding principal from prior tranches,
the Company’s compliance with the applicable continued listing requirements of Nasdaq, and other customary equity conditions. The
Buyer may waive any such conditions and may elect to initiate a closing at its discretion.
On July 16, 2026, the initial closing pursuant to
the Note Purchase Agreement occurred and the Company issued and sold to the Buyer the Initial Notes. The Initial Notes bear and any additional
Notes bear interest at a rate of 8.25% per annum, payable in shares of Common Stock subject to satisfaction of specified equity conditions
or, at the Company’s election, in cash. Upon the occurrence and during the continuance of an Event of Default (as defined in the
Notes), the interest rate will increase by 9.0% per annum. The amounts outstanding under the Notes are convertible at any time, at the
holders option, into shares of Common Stock at a conversion price equal to 125% of the Nasdaq official closing price on the trading day
immediately prior to issuance, subject to adjustment therein. In addition, at the election of the holder, the amounts outstanding under
the Notes may be converted into shares of Common Stock at the Alternate Conversion Price (as defined in the Notes), subject to the Floor
Price (as defined in the Notes).
The Initial Notes have a conversion price of $17.81
per share and mature on July 16, 2028.
The conversion price of the Notes is subject to adjustment
in the event the Company issues securities at a price below the then-applicable conversion price, to a most-favored-nation adjustment
in the event the Company issues securities with a variable price feature, and to adjustment upon any stock combination or reverse stock
split. The Company may redeem the Notes at 120% of the amount redeemed during the first twelve months following issuance and at 110% thereafter.
Upon an Event of Default, the holders may require redemption at 130%, and upon a Change of Control (as defined in the Notes), at 120%.
A Note holder will not have the right to convert any portion of a Note, to the extent that, after giving effect to such conversion, the
holder (together with certain of its affiliates and other related parties) would beneficially own in excess of 4.99% of the shares of
Common Stock outstanding immediately after giving effect to such conversion (the “Beneficial Ownership Limitation”). However,
a Note holder, upon notice to the Company, may increase or decrease the Beneficial Ownership Limitation, provided that the Beneficial
Ownership Limitation in no event exceeds 9.99% of the shares of Common Stock outstanding immediately after giving effect to such conversion.
Any increase in the Beneficial Ownership Limitation will not be effective until the sixty-first (61st) day after such notice is delivered
to the Company.
The Buyer also may not convert any Notes into a number
of shares of Common Stock in excess of 19.99% of the outstanding shares of Common Stock as of the date of the Note Purchase Agreement
until the Company obtains stockholder approval for such issuances (the “Note Nasdaq Stockholder Approval”) in accordance with
the applicable rules of The Nasdaq Stock Market LLC (“Nasdaq”).
The Note Purchase Agreement contains customary representations,
warranties and covenants, including restrictions on the Company’s ability to incur Indebtedness (as defined in the Notes), grant
liens and effect Variable Rate Transactions (as defined in the Notes). Pursuant to the Note Purchase Agreement, the Company granted the
Buyer a right to participate in any Subsequent Placement (as defined in the Notes) for a period of 18 months from the date of the Note
Purchase Agreement, and is required to obtain stockholder approval to effect one or more reverse stock splits within a ratio of 5-for-1
and 250-for-1, increase the authorized number of shares of Common Stock and the Note Nasdaq Stockholder Approval within 50 days of the
date of the initial closing.
The Company’s obligations under the Notes are
secured by a lien on substantially all of the assets of the Company and its subsidiaries pursuant to a Security and Pledge Agreement (the
“Security and Pledge Agreement”) and are guaranteed by each of the Company’s subsidiaries pursuant to a Guaranty (the
“Guaranty”). In connection with the Note Purchase Agreement, the Company also entered into a Registration Rights Agreement
(the “Note Registration Rights Agreement”) with the Buyer, pursuant to which the Company agreed to register for resale the
shares of Common Stock issuable upon the conversion or otherwise pursuant to the terms of the Notes within certain timeframes specified
therein.
The foregoing description of the Initial Note, Notes,
Note Purchase Agreement, Note Registration Rights Agreement, Security and Pledge Agreement and Guaranty do not purport to be complete
and are qualified in their entirety by reference to the forms of such agreements filed as Exhibits 4.1, 4.2, 10.2, 10.3, 10.4 and 10.5,
respectively, to this Current Report on Form 8-K and are incorporated herein by reference.
Equity Purchase Facility (Equity Line)
On July 16, 2026, the Company also entered into an
Equity Purchase Facility Agreement (the “Equity Purchase Facility Agreement”) with a certain institutional investor (the “Investor”),
pursuant to which the Company has the right, but not the obligation, to issue and sell to the Investor (an “Advance”), from
time to time and in the Company’s sole discretion by delivery of an advance notice, and the Investor is obligated to purchase, up
to an aggregate of $100.0 million of newly issued shares of Common Stock (the “Advance Shares”) for the duration of the Equity
Purchase Facility Agreement. The Company is under no obligation to sell any Advance Shares under the Equity Purchase Facility Agreement.
The purchase price per Advance Share issued pursuant
to any Advance will be determined pursuant to the terms of the Equity Purchase Facility Agreement. The Company may, in its sole discretion,
select the amount of the Advance requested by the Company in each Advance Notice. There is no mandatory minimum amount for each Advance
and are no non-usage fees for not obtaining Advances, however, each requested Advance may not exceed the Maximum Advance Amount (as defined
in the Equity Purchase Facility Agreement).
The Company may not direct the Investor to purchase
any Advance Shares under the Equity Purchase Facility Agreement if such purchase, when aggregated with all other shares of Common Stock
owned by the Investor and its affiliates beneficially, would result in the Investor and its affiliates beneficially owning (on an aggregated
basis) more than the Beneficial Ownership Limitation; provided that, the Investor may increase or decrease the Beneficial Ownership Limitation,
upon notice to the Company, which notice with respect to an increase will not be effective until the 61st day following the date such
notice is delivered, not to exceed 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to the issuance
of shares of Common Stock held by the Investor.
The Company also may not sell the Investor a number
of Advance Shares in excess of 19.99% of the outstanding shares of Common Stock as of the date of the Equity Purchase Facility Agreement
(the “Exchange Cap”) until the Company obtains stockholder approval for such issuances in accordance with the applicable rules
of Nasdaq (the “EPFA Nasdaq Stockholder Approval”).
Pursuant to the Equity Purchase Facility Agreement,
the Company granted the Investor a right of first refusal with respect to Subsequent Placements (as defined in the Equity Purchase Facility
Agreement) during a specified restricted period. Pursuant to the Equity Purchase Facility Agreement the Company also agreed to, among
other things, refrain from entering into or effecting any Variable Rate Transactions (as defined in the Equity Purchase Facility Agreement)
and is required to obtain stockholder approval to increase the authorized number of shares of Common Stock and the EPFA Nasdaq Stockholder
Approval within 60 days of the date of the initial closing.
In connection with the Equity Purchase Facility Agreement,
the Company entered into a Registration Rights Agreement with the Investor (the “EPFA Registration Rights Agreement”), pursuant
to which the Company agreed to file a registration statement covering the resale of the Advance Shares and to use its best efforts to
have such registration statement declared effective within certain timeframes specified therein.
The foregoing description of the Equity Purchase Facility
Agreement and EPFA Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the
forms of such agreements filed as Exhibits 10.6 and 10.7, respectively, to this Current Report on Form 8-K and are incorporated herein
by reference.
Item 2.01. Completion of Acquisition or Disposition of Assets.
On July 14, 2026, the Company completed the acquisition
of the Purchased IP pursuant to the IP Purchase Agreement (the “Closing”). At the Closing, the Company paid the initial cash
tranche and issued the Consideration Shares and the Preferred Consideration Shares to the Seller (and/or its permitted assignees) in accordance
with the IP Purchase Agreement. The information set forth in Item 1.01 of this Current Report on Form 8-K under the heading “Acquisition
of TradeIQ Intellectual Property Assets” is incorporated by reference into this Item 2.01. Neither the Company nor any of its affiliates,
directors or officers has any material relationship with the Seller other than in respect of the IP Purchase Agreement, and the transaction
was negotiated at arm’s length.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current
Report on Form 8-K with respect to the Notes, the Note Purchase Agreement, the Security and Pledge Agreement and the Guaranty is incorporated
herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
The information set forth in Items 1.01 and 2.01 of
this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
At the Closing of the acquisition of the Purchased
IP, the Company issued 200,000 shares of Common Stock and 3,950 shares of Series C Preferred to the Seller (and/or its permitted assignees)
as partial consideration for the Purchased IP. The issuances were made without registration under the Securities Act of 1933, as amended
(the “Securities Act”), in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act
and/or Rule 506(b) of Regulation D and/or Regulation S thereunder, based in part upon representations of the Seller and each permitted
assignee that it is an “accredited investor” within the meaning of Rule 501(a) of Regulation D or a non-U.S. person within
the meaning of Regulation S, and that it is acquiring the securities for investment and not with a view to distribution. No underwriters
were involved, no commissions were paid, and no general solicitation or advertising was used in connection with the issuances.
The Initial Note was, and any additional Notes and
the shares of Common Stock issuable upon conversion or otherwise pursuant to the terms thereof, and the Advance Shares issuable pursuant
to the Equity Purchase Facility Agreement, are being, offered, issued and sold in reliance upon the exemption from the registration requirements
of the Securities Act afforded by Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. The Buyers
and the Investor have each represented that they are “accredited investors” as defined in Rule 501(a) of Regulation D and
that they are acquiring such securities for investment purposes only and not with a view to, or for resale in connection with, any distribution
thereof.
Item 3.03. Material Modification to Rights of Security Holders.
To the extent required by Item 3.03 of Form 8-K, the
information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated by reference into this Item 3.03. Under the Certificate
of Designation (as defined below), for so long as any shares of Series C Preferred remain outstanding and any accrued dividends thereon
remain unpaid, the Company may not, subject to limited exceptions, declare or pay dividends on, or redeem or repurchase, its Common Stock
or other junior stock.
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change
in Fiscal Year.
On July 14, 2026, the Company filed a Certificate
of Designation, Preferences, Rights and Limitations of Series C Non-Voting Non-Convertible Preferred Stock (the “Certificate of
Designation”) with the Secretary of State of the State of Nevada, effective upon filing, designating 3,950 shares of the Company’s
authorized preferred stock as Series C Preferred. The material terms of the Series C Preferred are as follows:
Stated value; ranking. Each share of Series
C Preferred has a stated value of US$1,000. The Series C Preferred ranks senior to the Common Stock, and to any other junior stock, as
to dividends, redemption and rights upon liquidation.
Dividends. The Series C Preferred accrues cumulative
cash dividends at the rate of 6% per annum on the stated value, payable annually in arrears on June 30 of each year, with the first dividend
payment date being June 30, 2027. Upon the occurrence and during the continuance of an event of default specified in the Certificate of
Designation, the dividend rate increases to 9% per annum, which (other than in the case of an insolvency event of the Company) is the
sole financial consequence of an event of default; no event of default other than an insolvency event gives the holders any right to require
redemption for cash.
Perpetual; no mandatory redemption; optional redemption.
The Series C Preferred has no fixed maturity date and is not subject to mandatory redemption. The Company may redeem the Series C
Preferred, in whole or in part, at any time at a price equal to the stated value plus accrued and unpaid dividends, without premium or
penalty, on not less than ten (10) Business Days’ prior written notice.
No voting rights; no conversion. The Series
C Preferred has no voting rights, other than limited contractual protective-consent rights of the holders of a majority of the outstanding
Series C Preferred with respect to matters such as amendments adverse to the Series C Preferred, the creation of senior or pari passu
stock, junior-stock dividends and repurchases while Series C dividends are unpaid, and transactions extinguishing the Series C Preferred
without payment. The Series C Preferred is not convertible into Common Stock or any other security of the Company, and contains no conversion
mechanic, price, ratio or trigger. Any future amendment to add a conversion feature would require the mutual written consent of the Company
and the holders of a majority of the outstanding Series C Preferred, compliance with applicable Nasdaq listing rules and any stockholder
approval required at that time.
Liquidation preference. Upon a liquidation,
dissolution or winding-up of the Company, holders of Series C Preferred are entitled to receive, before any distribution to junior stock,
an amount per share equal to the stated value plus accrued and unpaid dividends. A merger, consolidation or other change-of-control transaction
in which the Company survives or in which common stockholders receive acquirer equity does not constitute a liquidation for this purpose.
The foregoing description of the Certificate of Designation
does not purport to be complete and is qualified in its entirety by reference to the full text of the Certificate of Designation, a copy
of which is filed as Exhibit 3.1 to this Current Report on Form 8-K and is incorporated herein by reference.
Item 8.01. Other Events.
As previously disclosed, on May 5, 2026 the Company
received a letter from the Listing Qualifications Department of Nasdaq notifying the Company that it no longer satisfied the minimum stockholders’
equity requirement of $2,500,000 for continued listing on The Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1). Since that time,
management has taken a number of steps and will continue to take additional steps intended to improve the Company’s stockholders’
equity and financial position, including the acquisition of Anira Consulting FZC (operating as “Tradewell”), the sale and
deconsolidation of Sadot Latam LLC and other legacy assets, the conversion of outstanding indebtedness into equity, the entry into an
option to acquire a portfolio of income-producing real estate and the acquisition of the TradeIQ intellectual property assets described
in Items 1.01 and 2.01 above, in each case as previously reported by the Company on Current Reports on Form 8-K or as reported herein.
Management believes that the Company’s stockholders’ equity, as adjusted for the steps outlined above, is in excess of $7,000,000
as of the date of this Current Report on Form 8-K and, although the Company’s financial statements for the applicable period have
not yet been finalized or reviewed, management currently believes that these steps enabled the Company to regain compliance with the minimum
stockholders’ equity requirement of $2,500,000 set forth in Nasdaq Listing Rule 5550(b)(1).
There can be no assurance, however, that the Company
has regained or will maintain compliance with the minimum stockholders’ equity requirement. The Company’s stockholders’
equity is subject to review by the Company’s independent registered public accounting firm, and no assurance can be given that such
review will reflect stockholders’ equity of at least $2,500,000 as of the end of the applicable fiscal quarter or at any time subsequent
thereto, or that Nasdaq will determine that the Company has regained compliance. The Company’s common stock remains subject to the
continued listing requirements of Nasdaq, and the failure to regain and maintain compliance could result in the delisting of the Company’s
common stock.
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking
statements” within the meaning of the federal securities laws, including statements regarding the expected benefits and integration
of the Purchased IP, the payment of future dividends on the Series C Preferred, the anticipated closings under the Note Purchase Agreement,
the Company’s ability to draw under the Equity Purchase Facility Agreement, the Company’s intention to seek stockholder approvals,
the filing and effectiveness of resale registration statements, the anticipated use of proceeds, the Company’s payment of the Cash
Payment and the effectiveness of the releases, and the Company’s compliance with the continued listing requirements of Nasdaq. These
statements are based on the Company’s current expectations and are subject to risks and uncertainties, including the Company’s
ability to satisfy the conditions to funding, to obtain the required stockholder and Nasdaq approvals, to regain and maintain compliance
with the continued listing requirements of Nasdaq, and to continue as a going concern, as well as the other risks described in the Company’s
filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2025 and
its subsequent Quarterly Reports on Form 10-Q. Actual results may differ materially. The Company undertakes no obligation to update any
forward-looking statement, except as required by law.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No.
Description
3.1
Certificate of Designation, Preferences, Rights and Limitations of Series C Non-Voting Non-Convertible Preferred Stock of Sadot Group Inc., filed with the Secretary of State of the State of Nevada on July 14, 2026.
4.1
Form of Senior Secured Convertible Note.
4.2
Form of Initial Note.
10.1
Intellectual Property Purchase Agreement, dated as of July 14, 2026, by and between Sadot Group Inc. and Litial Ltd.*
10.2
Form of Securities Purchase Agreement, dated as of July 16, 2026, by and among Sadot Group Inc. and the buyers party thereto.
10.3
Form of Registration Rights Agreement, dated as of July 16, 2026, by and among Sadot Group Inc. and the buyers party thereto.
10.4
Form of Security and Pledge Agreement, dated as of July 16, 2026, by and among Sadot Group Inc., the grantors party thereto and the collateral agent.
10.5
Form of Guaranty, dated as of July 16, 2026, made by the guarantors party thereto in favor of the collateral agent.
10.6
Form of Equity Purchase Facility Agreement, dated as of July 16, 2026, by and between Sadot Group Inc. and the investor party thereto.
10.7
Form of Registration Rights Agreement, dated as of July 16, 2026, by and between Sadot Group Inc. and the investor party thereto.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Certain schedules and exhibits have been omitted
pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule or exhibit to
the Securities and Exchange Commission upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
SADOT GROUP INC.
Date: July 17, 2026
By:
/s/
Chagay Ravid
Name:
Chagay Ravid
Title:
Chief Executive Officer
EX-3.1 — EXHIBIT 3.1
EX-3.1
Filename: e7788_ex3-1.htm · Sequence: 2
EXHIBIT 3.1
EX-4.1 — EXHIBIT 4.1
EX-4.1
Filename: e7788_ex4-1.htm · Sequence: 3
EXHIBIT 4.1
[FORM OF SENIOR SECURED CONVERTIBLE PROMISSORY NOTE]
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH
THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE
SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY
REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 20(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT
(“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1). THE COMPANY WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE
OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i).
THE COMPANY MAY BE REACHED AT TELEPHONE NUMBER (832) 604-9568.
sadot group
inc.
Senior Secured
Convertible Promissory Note
Due [•],
20[•]
Issuance Date: [●], 20[●]
Original Principal Amount: U.S. $[●]
FOR VALUE RECEIVED, Sadot
Group Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of [•] or its registered
assigns (the “Holder”) the amount set forth above as the Original Principal Amount (or such lesser amount as reduced
pursuant to the terms hereof pursuant to repayment, redemption, conversion or otherwise, the “Principal”) when due,
whether upon the Maturity Date, or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to
pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the
date set forth above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon
the Maturity Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This
Senior Secured Convertible Promissory Note (including all Senior Secured Convertible Promissory Notes issued in exchange, transfer or
replacement hereof, this “Note”) is one of an issue of Senior Secured Convertible Promissory Notes issued pursuant
to that certain Securities Purchase Agreement, dated as of July 16, 2026 (the “Subscription Date”), by and among the
Company and the investors (the “Buyers”) referred to therein, as amended from time to time (collectively, the “Notes”,
and such other Senior Secured Convertible Promissory Notes, the “Other Notes”). Certain capitalized terms used herein
are defined in Section 33.
1. PAYMENTS
OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash (excluding any amounts paid in shares of
Common Stock on the Maturity Date in accordance with Section 9) representing all outstanding Principal, accrued and unpaid Interest and
accrued and unpaid Late Charges (as defined in Section 26(c)) on such Principal and Interest. Other than as specifically permitted by
this Note, the Company may not prepay or redeem any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid
Late Charges on Principal and Interest, if any.
2. INTEREST;
INTEREST RATE.
(a) Interest
on this Note shall commence accruing on the Issuance Date and shall accrue on all outstanding Principal and shall be computed on the basis
of a 360-day year and twelve 30-day months and shall be payable in arrears on the first calendar day of each Fiscal Quarter (as defined
below) (each, an “Interest Date”) with the first Interest Date being [•], 2026. Interest shall be payable on each
Interest Date, to the Holder on the applicable Interest Date, in shares of Common Stock (“Interest Shares”) so long
as there has been no Equity Conditions Failure; provided however, that the Company may, at its option following notice to the Holder,
pay Interest on any Interest Date in cash (“Cash Interest”) or in a combination of Cash Interest and Interest Shares.
The Company shall deliver a written notice (each, an “Interest Election Notice”) to the Holder on or prior to the sixth
(6th) Trading Day prior to the applicable Interest Date (the date such notice is delivered to all of the holders of Notes,
the “Interest Notice Date”) which notice (i) either (A) confirms that Interest to be paid on such Interest Date shall
be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest or a combination of Cash Interest and Interest Shares
and specifies the amount of Interest that shall be paid as Cash Interest and the amount of Interest, if any, that shall be paid in Interest
Shares and (ii) certifies that there has been no Equity Conditions Failure. If an Equity Conditions Failure has occurred as of the Interest
Notice Date, then unless the Company has elected to pay such Interest as Cash Interest, the Interest Election Notice shall indicate that
unless the Holder waives the Equity Conditions Failure, the Interest shall be paid as Cash Interest. Notwithstanding anything herein to
the contrary, if no Equity Conditions Failure has occurred as of the Interest Notice Date but an Equity Conditions Failure occurs at any
time prior to the Interest Date, (A) the Company shall provide the Holder a subsequent notice to that effect and (B) unless the Holder
waives the Equity Conditions Failure, the Interest shall be paid in cash. Interest to be paid on an Interest Date in Interest Shares shall
be paid in a number of fully paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a)) of Common
Stock equal to the quotient of (1) the amount of Interest payable on such Interest Date less any Cash Interest paid and (2) the Interest
Conversion Price in effect on the applicable Interest Date.
(b) When
any Interest Shares are to be paid on an Interest Date, the Company shall (i) (A) provided that the Company’s transfer agent (the
“Transfer Agent”) is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program (“FAST”), credit such aggregate number of Interest Shares to which the Holder shall be entitled to
the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the
Transfer Agent is not participating in FAST, issue and deliver on the applicable Interest Date, to the address set forth in the register
maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address as specified by the Holder
in writing to the Company at least two (2) Business Days prior to the applicable Interest Date, a certificate or statement of book-entry,
registered in the name of the Holder or its designee, for the number of Interest Shares to which the Holder shall be entitled which certificate
or statement of book-entry shall not bear any restrictive legends unless required pursuant to the rules and regulations of the Commission,
and (ii) with respect to each Interest Date, pay to the Holder, in cash by wire transfer of immediately available funds, the amount of
any Cash Interest; provided further, that, in the event of the Conversion Floor Price Condition, on the applicable Interest Date the Company
shall also deliver to the Holder the applicable Interest Floor Amount.
(c) Prior
to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate on all outstanding principal amounts
and be payable by way of inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i)
or upon any redemption in accordance with Section 13 or any required payment upon any Bankruptcy Event of Default. From and after the
occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be adjusted on each Trading Day in
which an Event of Default is continuing to the sum of (x) the Interest Rate then in effect on such date of determination and (y) nine
percent (9.0%) per annum (the “Default Rate”). In the event that such Event of Default is subsequently cured (and no
other Event of Default then exists, including, without limitation, for the Company’s failure to pay such Interest at the Default
Rate on the applicable Interest Date), the adjustment referred to in the preceding sentence shall cease to be effective as of the calendar
day immediately following the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the
continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of
Default through and including the date of such cure of such Event of Default.
2
3. CONVERSION
OF NOTES. At any time after the date hereof, this Note shall be convertible into validly issued, fully paid and non-assessable shares
of Common Stock, on the terms and conditions set forth in this Section 3.
(a) Conversion
Right. Subject to the provisions of Section 3(d), at any time or times on or after the date hereof, the Holder shall be entitled to
convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue any fraction
of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer,
stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined
below)) that may be payable with respect to the issuance and delivery of shares of Common Stock upon conversion of any Conversion Amount.
(b) Conversion
Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i) “Conversion
Amount” means the sum of (x) the portion of the Principal to be converted, redeemed or otherwise with respect to which this
determination is being made, (y) all accrued and unpaid Interest with respect to such portion of the Principal amount and accrued and
unpaid Late Charges with respect to such portion of such Principal and such Interest, if any, and (z) any other unpaid amounts pursuant
to the Transaction Documents, if any.
(ii) “Conversion
Price” means, as of any Conversion Date or other date of determination, $[•][1],
subject to adjustment as provided herein.
(c) Mechanics
of Conversion.
(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the
Holder shall deliver (whether via electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a
copy of an executed notice of conversion in the form attached hereto as Exhibit I (each, a “Conversion Notice”)
to the Company. If required by Section 3(c)(iii), within one (1) Trading Day following a conversion of this Note as aforesaid, the Holder
shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking
with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 20(b)). the date of receipt of a Conversion
Notice, the Company shall transmit by electronic mail an acknowledgment, in the form attached hereto as Exhibit II, of confirmation
of receipt of such Conversion Notice and representation as to whether such shares of Common Stock may then be resold pursuant to Rule
144 or an effective and available registration statement (each, an “Acknowledgement”) to the Holder and the Transfer
Agent which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the
terms herein. On or before the first (1st) Trading Day following the date on which the Company has received a Conversion Notice
(or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated
on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “Share Delivery
Deadline”), the Company shall (1) provided that the Transfer Agent is participating in FAST, credit such aggregate number of
shares of Common Stock to which the Holder shall be entitled pursuant to such conversion to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in FAST,
upon the request of the Holder, issue and deliver (via reputable overnight courier) to the address as specified in the Conversion Notice,
a certificate, registered in the name of the Holder or its designee,
[1]
Insert the 125% of the Nasdaq Official Closing Price of the Common Stock (as reflected on Nasdaq.com) on the Trading Day immediately prior
to (x) with respect to the Initial Closing (as defined in the Securities Purchase Agreement), such Initial Closing Date, (y) with respect
to the Second Closing (as defined in the Securities Purchase Agreement), such Second Closing Date or (z) with respect to each Additional
Closing (as defined in the Securities Purchase Agreement), such applicable Additional Closing Date (as defined in the Securities Purchase
Agreement).
3
for the number of shares of Common Stock to which the Holder shall
be entitled pursuant to such conversion. If this Note is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding
Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon
as practicable and in no event later than two (2) Business Days after receipt of this Note and at its own expense, issue and deliver to
the Holder (or its designee) a new Note (in accordance with Section 20(d)) representing the outstanding Principal not converted. The Person
or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on the Conversion Date; provided, that the Holder shall be deemed to have
waived any voting rights of any such shares of Common Stock that may arise during the period commencing on such Conversion Date, through,
and including, such applicable Share Delivery Deadline (each, an “Conversion Period”), as necessary, such that the
aggregate voting rights of any shares of Common Stock beneficially owned by the Holder and/or any Attribution Parties, collectively, on
any such applicable date shall not exceed the Maximum Percentage (as defined below) as a result of any such conversion of this Note. Notwithstanding
anything to the contrary contained in this Note or the Registration Rights Agreement, after the effective date of the Registration Statement
(as defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period (as defined
in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the
Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement) with
respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular
Registration Statement to the extent applicable, and for which the Holder has not yet settled.
(ii) Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery
Deadline, either (I) if the Transfer Agent is not participating in FAST, to issue and deliver to the Holder (or its designee) a certificate
for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s
share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of this Note (as
the case may be) or (II) if the Registration Statement covering the resale of the shares of Common Stock that are the subject of the Conversion
Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable Conversion Shares
and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify
the Holder and (y) deliver the shares of Common Stock electronically without any restrictive legend by crediting such aggregate number
of shares of Common Stock to which the Holder is entitled pursuant to such conversion to the Holder’s or its designee’s balance
account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter
referred as a “Notice Failure” and together with the event described in clause (I) above, a “Conversion Failure”),
then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such
Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 2.0% of the product
of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the applicable Share Delivery Deadline
and to which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect
at any time during the period beginning on the applicable Conversion Date and ending on the applicable Share Delivery Deadline and (2)
the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case
may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion
Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant
to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (A) if the Transfer
Agent is not participating in FAST, the Company shall fail to issue and deliver to the Holder (or its designee) a certificate and register
such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST,
4
the Transfer Agent
shall fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s conversion hereunder or pursuant to the Company’s obligation pursuant to
clause (II) below or (B) a Notice Failure occurs, and if on or after such Share Delivery Deadline the Holder acquires (in an open market
transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock
issuable upon such conversion that the Holder is entitled to receive from the Company and has not received from the Company in connection
with such Conversion Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to the Holder, the Company shall, within one (1) Business Day after receipt of the Holder’s request and in the Holder’s
discretion, either: (I) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions,
stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (including, without limitation,
by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon
the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly
honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y) the lowest
Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice
and ending on the date of such issuance and payment under this clause (II) (the “Buy-In Payment Amount”). Nothing shall
limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion of this Note as required pursuant
to the terms hereof.
(iii) Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and addresses
of the holders of each Note and the principal amount of the Notes held by such holders (the “Registered Notes”). The
entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes
shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without limitation,
the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned,
transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written
request to assign, transfer or sell all or part of any Registered Note by the registered holder thereof, the Company shall record the
information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the
principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 20, provided that
if the Company does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within two
(2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale
(as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of
this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless
(A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company
following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder
and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid (as the case may be) and
the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder
and the Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update the Register to
record such Principal, Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments
(as the case may be) within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect
such occurrence.
5
(iv) Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same
Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject
to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s
portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder
relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number
of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the
number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 25.
(d) Limitations
on Conversions.
(i) Beneficial
Ownership. The Company shall not effect the conversion of any portion of this Note, and the Holder shall not have the right to convert
any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and void and treated
as if never made, to the extent that after giving effect to such conversion, the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination
of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining,
nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes
or shares of convertible preferred stock or warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation
on conversion or exercise analogous to the limitation contained in this Section 3(d). For purposes of this Section 3(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of
Common Stock the Holder may acquire upon the conversion of this Note without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement
by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common
Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives a Conversion Notice from the Holder
at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company
shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice
would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 3(d), to exceed the Maximum Percentage,
the Holder must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For
any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and
in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this
Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In
the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note results in the Holder and the other Attribution
Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common
Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution
Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed
null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. Upon
delivery of a written notice to the Company,
6
the Holder may from time to time increase (with such increase not effective until the sixty-first
(61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99%
as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first
(61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder
and the other Attribution Parties and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed
to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No
prior inability to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this Section 3(d) to the extent necessary to correct this paragraph (or
any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this
Section 3(d) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained
in this paragraph may not be amended, modified or waived and shall apply to a successor holder of this Note.
(ii) Principal
Market Limitation. Notwithstanding anything in this Note to the contrary, the Company shall not issue any shares of Common Stock upon
conversion of this Note or the Other Notes, or otherwise, if the issuance of such shares of Common Stock, together with the issuance of
shares of Common Stock upon the conversion of any Other Notes issuable pursuant to the Securities Purchase Agreement and with any other
related transactions that may be considered part of the same series of transactions, would exceed the aggregate number shares of Common
Stock that the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of
the Principal Market and shall be referred to as the “Exchange Cap,” except that such limitation shall not apply if
the Company has obtained Stockholder Approval.
(e) Right
of Alternate Conversion.
(i) General.
(1) Alternate
Optional Conversion. Subject to Section 3(d), at the option of the Holder, at any time on or after the Issuance Date, the Holder may
convert (each, an “Alternate Optional Conversion”, and the date of such Alternate Optional Conversion, an “Alternate
Optional Conversion Date”) all, or any part, of this Note into shares of Common Stock (such portion of the Conversion Amount
subject to such Alternate Optional Conversion, the “Alternate Optional Conversion Amount”) at the Alternate Conversion
Price.
(2) Alternate
Conversion Upon an Event of Default. Subject to Section 3(d), at any time after the occurrence of an Event of Default (regardless
of whether such Event of Default has been cured, or if the Company has delivered an Event of Default Notice to the Holder or if the Holder
has delivered an Event of Default Redemption Notice to the Company or otherwise notified the Company that an Event of Default has occurred),
the Holder may, at the Holder’s option, convert (each, an “Alternate Event of Default Conversion” and together
with each Alternate Optional Conversion, each, an “Alternate Conversion”, and the date of such Alternate Event of Default
Conversion, each, an “Alternate Event of Default Conversion Date”, and together with each Alternate Optional Conversion
Date, each, an “Alternate Conversion Date”) all, or any part of, the Conversion Amount (such portion of the Conversion
Amount subject to such Alternate Conversion, the “Alternate Event of Default Conversion Amount” and together with each
Alternate Optional Conversion Amount, each, an “Alternate Conversion Amount”) into shares of Common Stock at the Alternate
Conversion Price.
7
(ii) Mechanics
of Alternate Conversion. On any Alternate Conversion Date, the Holder may voluntarily convert any Alternate Conversion Amount pursuant
to Section 3(c) (with “Alternate Conversion Price” replacing “Conversion Price” for all purposes hereunder with
respect to such Alternate Conversion and, solely with respect to the calculation of the number of shares of Common Stock issuable upon
conversion of any Conversion Amount in an Alternate Event of Default Conversion, with “Event of Default Redemption Premium of the
Conversion Amount” replacing “Conversion Amount” in clause (x) of the definition of Conversion Rate above with respect
to such Alternate Conversion) by designating in the Conversion Notice delivered pursuant to this Section 3(e) of this Note that the Holder
is electing to use the Alternate Conversion Price for such conversion; provided that in the event of the Conversion Floor Price Condition,
on the applicable Alternate Conversion Date the Company shall also deliver to the Holder the applicable Alternate Conversion Floor Amount.
Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Company delivers shares of Common
Stock representing the applicable Alternate Conversion Amount to the Holder, such Alternate Conversion Amount may be converted by the
Holder into shares of Common Stock pursuant to Section 3(c) without regard to this Section 3(e).
4. RIGHTS
UPON EVENT OF DEFAULT.
(a) Event
of Default. Each of the following events shall constitute an “Event of Default” and each of the events in clauses
(ix), (x) and (xi) shall constitute a “Bankruptcy Event of Default”:
(i) the
failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on or prior
to the date that is five (5) calendar days after the applicable Filing Deadline (as defined in the Registration Rights Agreement) or the
failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is five (5) calendar
days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);
(ii) while
the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop
order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable Securities (as
defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance with the terms
of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five (5) consecutive days or for more
than an aggregate of ten (10) calendar days in any 365-day period (excluding days during an Allowable Grace Period (as defined in the
Registration Rights Agreement));
(iii) the
suspension (or threatened suspension) from trading or the failure (or threatened failure) of the shares of Common Stock to be trading,
quoted or listed (as applicable) on an Eligible Market for a period of one (1) Trading Day, or the delisting or removal from quotation
of the shares of Common Stock from an Eligible Market;
(iv) the
Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5)
Trading Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including, without limitation,
by way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for
conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant
to Section 3(d);
(v) except
to the extent the Company is in compliance with Section 12(b) below, at any time following the tenth (10th) consecutive day
that the Holder’s Authorized Share Allocation (as defined in Section 12(a) below) is less than the number of shares of Common Stock
that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations
on conversion set forth in Section 3(d) or otherwise),;
8
(vi) the
Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts
when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure to pay any redemption
payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement,
document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the
case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of
at least two (2) Trading Days;
(vii) the
Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or
exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under the Securities
Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise
then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(viii) the
occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $250,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other Notes;
(ix) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against
the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within
thirty (30) days of their initiation;
(x) the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary
case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors,
or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission
by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any
Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure
sale or any other similar action under federal, state or foreign law;
(xi) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar
law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving
as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company
or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any
substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order,
judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period
of thirty (30) consecutive days;
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(xii) a
final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company and/or any of
its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending
appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered
by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long
as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably
satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary
(as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(xiii) the
Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period,
any payment with respect to any Indebtedness in excess of $250,000 due to any third party (other than, with respect to unsecured Indebtedness
only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect
to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation
of any agreement for monies owed or owing in an amount in excess of $250,000, which breach or violation permits the other party thereto
to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would,
with or without the passage of time or the giving of notice, result in a default or event of default under any agreement binding the Company
or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations
(including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of
its Subsidiaries, individually or in the aggregate;
(xiv) other
than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any representation or warranty,
or any covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or
condition that is curable, only if such breach remains uncured for a period of two (2) consecutive Trading Days;
(xv) a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the Equity Conditions
are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Event of Default has occurred;
(xvi) any
breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 15 of this Note;
(xvii) any
Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;
(xviii) any
provision of any Transaction Document (including, without limitation, the Security Documents and the Guaranties) shall at any time for
any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the parties thereto,
or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or
any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability
thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under
any Transaction Document (including, without limitation, the Security Documents and the Guaranties);
(xix) any
Security Document shall for any reason fail or cease to create a separate valid and perfected and, except to the extent permitted by the
terms hereof or thereof, first priority Lien (as defined in the Securities Purchase Agreement) on the Collateral (as defined in the Security
Documents) in favor of the Collateral Agent (as defined in the Securities Purchase Agreement) or any material provision of any Security
Document shall at any time for any reason cease to be valid and binding on or enforceable against the Company or the validity or enforceability
thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any governmental authority having
jurisdiction over the Company, seeking to establish the invalidity or unenforceability thereof;
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(xx) any
material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or
substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance
could have a Material Adverse Effect;
(xxi) the
Company fails to receive the Reverse Stock Split Authority by the Stock Split Authority Deadline or the Subsequent Stock Split Authority
by the Subsequent Stock Split Authority Deadline;
(xxii) the
Collateral Agent fails to have electronic access to the records of the Custodian with respect to the assets held by the Company and/or
any of its Subsidiaries, from time to time;
(xxiii) the
Company issues any instructions, directly or indirectly, to the Custodian in violation of any term or condition of any Note or any other
Transaction Documents;
(xxiv) any
Change of Control occurs, or the Company enters into any agreement to effect a Change of Control;
(xxv) a
Fundamental Transaction occurs, or the Company enters into any agreement to effect a Fundamental Transaction;
(xxvi) the
Company fails to engage the New Transfer Agent (as defined in the Securities Purchase Agreement) on or prior to the New Transfer Agent
Deadline (as defined in the Securities Purchase Agreement); or
(xxvii) any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b) Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other Note,
the Company shall within one (1) Business Day deliver written notice thereof via electronic mail and overnight courier (with next day
delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s
receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem
(regardless of whether such Event of Default has been cured) all or any portion of this Note by delivering written notice thereof (the
“Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion
of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section
4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied
by (B) the Event of Default Redemption Premium and (ii) the product of (X) the Conversion Rate with respect to the Conversion Amount in
effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied by (Y) the product of (1) the Event of Default
Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing
on the date immediately preceding such Event of Default and ending on the date the Company makes the entire payment required to be made
under this Section 4(b) (the “Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall
be made in accordance with the provisions of Section 13. To the extent redemptions required by this Section 4(b) are deemed or determined
by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Event of Default Redemption Price
(together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together
with any Late Charges thereon) may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to the terms
of this Note. In the event of the Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages
would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty
of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this
Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty. Any redemption upon an Event of Default shall not constitute an election of remedies by the Holder,
and all other rights and remedies of the Holder shall be preserved.
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(c) Mandatory
Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity Date, the Company
shall immediately pay to the Holder an amount in cash representing (i) all outstanding Principal, accrued and unpaid Interest and accrued
and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Event of Default Redemption Premium, in addition to any
and all other amounts due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person
or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default,
in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect
of such Bankruptcy Event of Default, any right to conversion, and any right to payment of the Event of Default Redemption Price or any
other Redemption Price, as applicable.
5. RIGHTS
UPON FUNDAMENTAL TRANSACTION.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all
of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section
5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental
Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount
and interest rate equal to the principal amounts then outstanding and the interest rates of the Notes held by such holder, having similar
conversion rights as the Notes and having similar ranking and security to the Notes, and satisfactory to the Holder and (ii) the
Successor Entity (including its Parent Entity) is a publicly traded corporation whose common equity is quoted on or listed for trading
on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the provisions of this Note and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor
Entity had been named as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the
Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable
under Sections 6 and 17, which shall continue to be receivable thereafter)) issuable upon the conversion or redemption of the Notes prior
to such Fundamental Transaction, such shares of the publicly traded common equity (or their equivalent) of the Successor Entity (including
its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Note
been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion of this Note), as
adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery
of written notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction without the assumption of this Note.
The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without
regard to any limitations on the conversion of this Note.
(b) Notice
of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the
consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement of such
Change of Control, the Company shall deliver written notice thereof via electronic mail and overnight courier to the Holder (a “Change
of Control Notice”). At any time during the period beginning after the Holder’s receipt of a Change of Control Notice
or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the
immediately preceding sentence (as applicable) and ending on twenty (20) Trading Days after the latest of (A) the date of consummation
of such Change of Control or (B) the date of receipt of such Change of Control Notice or (C) the date of the announcement of such Change
of Control, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Change
of Control Redemption Notice”) to the Company,
12
which Change of Control Redemption Notice shall indicate the Conversion Amount
the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company
in cash at a price equal to the greatest of (i) the product of (w) the Change of Control Redemption Premium multiplied by (y) the Conversion
Amount being redeemed, (ii) the product of (x) the Change of Control Redemption Premium multiplied by (y) the product of (A) the Conversion
Amount being redeemed multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the Common Stock during
the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change of Control
and (2) the public announcement of such Change of Control and ending on the date the Holder delivers the Change of Control Redemption
Notice by (II) the Conversion Price then in effect and (iii) the product of (y) the Change of Control Redemption Premium multiplied by
(z) the product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration and
the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of Common Stock
upon consummation of such Change of Control (any such non-cash consideration constituting publicly-traded securities shall be valued at
the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such Change of
Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of such proposed Change
of Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public announcement of such proposed
Change of Control) divided by (II) the Conversion Price then in effect (the “Change of Control Redemption Price”).
Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 13 and shall have priority to payments
to shareholders in connection with such Change of Control. To the extent redemptions required by this Section 5(b) are deemed or determined
by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price
(together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together
with any Late Charges thereon) may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3.
In the event of the Company’s redemption of any portion of this Note under this Section 5(b), the Holder’s damages would be
uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section
5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty.
6. RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Section 7 and 17 below, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase shares, warrants, securities or other property pro rata to all or substantially
all of the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the
Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any
limitations or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted at the Alternate
Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken for the grant, issuance or
sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such Purchase Right to the extent of the Maximum Percentage (and shall not be
entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent
of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an expiration date,
maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable) for the
benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance (and, if such Purchase Right
has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance,
if applicable)) to the same extent as if there had been no such limitation).
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(b) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of Common Stock are entitled to receive securities or other assets with respect to or in exchange
for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder
will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option (i) in addition to the shares of
Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect
to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without
taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets received by the holders of Common Stock in connection with
the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been
issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such
consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance
satisfactory to the Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events and shall
be applied without regard to any limitations on the conversion or redemption of this Note.
7. RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Issuance Date the Company grants, issues or sells
(or enters into any agreement to grant, issue or sell), or in accordance with this Section 7(a) is deemed to have granted, issued or sold,
any shares of Common Stock (including the granting, issuance or sale of shares of Common Stock owned or held by or for the account of
the Company, but excluding any Excluded Securities granted, issued or sold or deemed to have been granted, issued or sold) for a consideration
per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to
such granting, issuance or sale or deemed granting, issuance or sale (such Conversion Price then in effect is referred to herein as the
“Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive
Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Conversion Price and the New Issuance Price under this Section 7(a)), the following
shall be applicable:
(i) Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options
and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the
terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting, issuance or sale of such Option for such price per share. For purposes of this Section
7(a)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon the granting, issuance or sale of such Option, upon exercise
of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise
pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable
(or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof, minus (2)
the sum of all amounts paid or payable to the holder of such Option (or any other Person) with respect to any one share of Common Stock
upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration (including,
without limitation, consideration consisting of cash, debt forgiveness, assets or any other property) received or receivable by, or benefit
conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price
shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options
or otherwise pursuant to the terms thereof or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities.
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(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible
Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the time of the issuance or sale (or the time of execution
of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes of this Section
7(a)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or
pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security
for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise
or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such
Convertible Security (or any other Person) with respect to any one share of Common Stock upon the issuance or sale (or the agreement to
issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable (including,
without limitation, any consideration consisting of cash, debt forgiveness, assets or other property) by, or benefit conferred on, the
holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price
shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities
or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any
Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), except
as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.
(iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional
changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 7(b) below), the Conversion
Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration
or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section
7(a)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that
was outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if
such adjustment would result in an increase of the Conversion Price then in effect.
(iv) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”,
and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities” and together with the
Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share
of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such
Primary Security is an Option and/or Convertible Security,
15
the lowest price per share for which one share of Common Stock is at any time
issuable upon the exercise or conversion of the Primary Security in accordance with Section 7(a)(i) or 7(a)(ii) above and (z) the average
VWAP of the Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”) immediately
following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior
to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period
and if this Note is converted, on any given Conversion Date during any such Adjustment Period, solely with respect to such portion of
this Note converted on such applicable Conversion Date, such applicable Adjustment Period shall be deemed to have ended on, and included,
the Trading Day immediately prior to such Conversion Date). If any shares of Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration
received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities
will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt.
If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5)
Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected
by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and
the fees and expenses of such appraiser shall be borne by the Company.
(v) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares
of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
(b) Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 6, Section 17
or Section 7(a), if the Company at any time on or after the Issuance Date subdivides (by any stock split, share dividend, share combination,
recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision
of Section 6, Section 17 or Section 7(a), if the Company at any time on or after the Issuance Date combines (by any stock split,
share dividend, share combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.
Any adjustment pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or combination.
If any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder,
then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.
16
(c) Holder’s
Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this Section 7, if the Company
in any manner issues or sells or enters into any agreement to issue or sell, any shares of Common Stock, Options or Convertible Securities
(any such securities, “Variable Price Securities”), after the Issuance Date that are issuable pursuant to such agreement
or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary with the market price
of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting
customary anti-dilution provisions (such as stock splits, share combinations, share dividends and similar transactions) (each of the formulations
for such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice
thereof via electronic mail and overnight courier to the Holder on the date of such agreement and the issuance of such shares of Common
Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price
Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Conversion
Price upon conversion of this Note by designating in the Conversion Notice delivered upon any conversion of this Note that solely for
purposes of such conversion the Holder is relying on the Variable Price rather than the Conversion Price then in effect. The Holder’s
election to rely on a Variable Price for a particular conversion of this Note shall not obligate the Holder to rely on a Variable Price
for any future conversion of this Note.
(d) Share
Combination Event Adjustments. If at any time and from time to time on or after the Issuance Date there occurs any stock split, share
dividend, share combination recapitalization or other similar transaction involving the shares of Common Stock (each, a “Share
Combination Event”, and such date thereof, the “Share Combination Event Date”) and the Event Market Price
is less than the Conversion Price then in effect (after giving effect to the adjustment in Section 7(b) above), then on the sixteenth
(16th) Trading Day immediately following such Share Combination Event Date, the Conversion Price then in effect on such sixteenth
(16th) Trading Day (after giving effect to the adjustment in Section 7(b) above) shall be reduced (but in no event increased)
to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result
in an increase in the Conversion Price hereunder, no adjustment shall be made.
(e) Other
Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable,
or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions
of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of share appreciation
rights, phantom share rights or other rights with equity features), then the Company’s board of directors shall in good faith determine
and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder, provided that no such adjustment
pursuant to this Section 7(e) will increase the Conversion Price as otherwise determined pursuant to this Section 7, provided further
that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.
(f) Calculations.
All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a share,
as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares shall be considered an issue or sale of shares of Common Stock.
(g) Voluntary
Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of
this Note, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce the then current
Conversion Price of each of the Notes to any amount and for any period of time deemed appropriate by the board of directors of the Company.
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8. REDEMPTIONS
AT THE COMPANY’S ELECTION.
(a) Company
Optional Redemption. At any time the Company shall have the right to redeem all of the outstanding amount then remaining under this
Note (each, a “Company Optional Redemption Amount”) on the Company Optional Redemption Date (each as defined below)
(each, a “Company Optional Redemption”). The Note subject to redemption pursuant to this Section 8(a) shall be redeemed
by the Company in cash at a price (each, a “Company Optional Redemption Price”) equal to (i) 120% of the amount being
redeemed as of the Company Optional Redemption Date, if such Company Optional Redemption Date is on or prior to the twelve (12) month
anniversary of the Issuance Date, or (ii) 110% of the amount being redeemed as of the Company Optional Redemption Date, if such Company
Optional Redemption Date occurs after the twelve (12) month anniversary of the Issuance Date. The Company may exercise its right to require
redemption under this Section 8(a) by delivering a written notice thereof by electronic mail and overnight courier to all, but not less
than all, of the holders of Notes (the “Company Optional Redemption Notice” and the date all of the holders of Notes
received such notice is referred to as the “Company Optional Redemption Notice Date”). The Company may deliver only
one Company Optional Redemption Notice hereunder in any given twenty (20) Trading Day period and each Company Optional Redemption Notice
shall be irrevocable. The Company Optional Redemption Notice shall (x) state the date on which the Company Optional Redemption shall occur
(the “Company Optional Redemption Date”) which date shall not be less than thirty (30) Trading Days following the Company
Optional Redemption Notice Date, and (y) state the aggregate amount of the Notes which is being redeemed in such Company Optional Redemption
from the Holder and all of the other holders of the Notes pursuant to this Section 8(a) (and analogous provisions under the Other Notes)
on the Company Optional Redemption Date. All amounts converted by the Holder after the Company Optional Redemption Notice Date shall reduce
the Company Optional Redemption Amount of this Note required to be redeemed on the Company Optional Redemption Date. Redemptions made
pursuant to this Section 8(a) shall be made in accordance with Section 13. In the event of the Company’s redemption of any portion
of this Note under this Section 8(a), the Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for
the Holder. Accordingly, any redemption premium due under this Section 8(a) is intended by the parties to be, and shall be deemed, a reasonable
estimate of the Holder’s actual loss of its investment opportunity and not as a penalty. For the avoidance of doubt, the Company
shall have no right to effect a Company Optional Redemption if any Event of Default has occurred and continuing, but any Event of Default
shall have no effect upon the Holder’s right to convert this Note in its discretion.
(b) Pro
Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section 8(a) above,
then it must simultaneously take the same action with respect to all of the outstanding Other Notes.
9. SUBSEQUENT
PLACEMENT OPTIONAL REDEMPTION
(a) General.
At any time from and after (i) the date the Holder becomes aware of the occurrence of a Subsequent Placement (as defined in the Securities
Purchase Agreement) (the “Holder Notice Date”), and (ii) the time of consummation of a Subsequent Placement (in each
case, other than with respect to Excluded Securities (as defined in the Securities Purchase Agreement)) (each, an “Eligible Subsequent
Placement”), the Holder shall have the right, in its sole discretion, to require that the Company redeem (each a “Subsequent
Placement Optional Redemption”) all, or any portion, of the Conversion Amount under this Note not in excess of (together with
any Subsequent Placement Optional Redemption Amount (as defined in the applicable other Note of the Holder) of any other Notes of the
Holder) the Holder’s Holder Pro Rata Amount of 20% of the gross proceeds of such Eligible Subsequent Placement (the “Eligible
Subsequent Placement Optional Redemption Amount”) by delivering written notice thereof (an “Subsequent Placement Optional
Redemption Notice”) to the Company. Notwithstanding the foregoing, if the Holder is participating in an Eligible Subsequent
Placement, upon the written request of the Holder, the Company shall apply all, or any part, as set forth in such written request, of
any amounts that would otherwise be payable to the Holder in such Subsequent Placement Optional Redemption, on a dollar-for-dollar basis,
against the purchase price of the securities to be purchased by the Holder in such Eligible Subsequent Placement.
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(b) Mechanics.
Each Subsequent Placement Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth in the applicable
Subsequent Placement Optional Redemption Notice, of the Eligible Subsequent Placement Optional Redemption Amount the Holder is electing
to have redeemed (the “Subsequent Placement Optional Redemption Amount”) and the date of such Subsequent Placement
Optional Redemption (the “Subsequent Placement Optional Redemption Date”), which shall be the later of (x) the fifth
(5th) Business Day after the date of the applicable Subsequent Placement Optional Redemption Notice and (y) the date of the
consummation of such Eligible Subsequent Placement. The portion of the Conversion Amount of this Note subject to redemption pursuant to
this Section 9 shall be redeemed by the Company in cash at a price equal to 120% of the Subsequent Placement Optional Redemption Amount
(the “Subsequent Placement Optional Redemption Price”). Redemptions required by this Section 10 shall be made in accordance
with the provisions of Section 13.
10. ASSET
SALE OPTIONAL REDEMPTION
(a) General.
At any time from and after the earlier of (x) the date the Holder becomes aware of the occurrence of an Asset Sale (including any insurance
and condemnation proceeds thereof) (the “Holder Notice Date”) and (y) the time of consummation of an Asset Sale (other
than sales of inventory and product in the ordinary course of business or Permitted Sales) (each, an “Eligible Asset Sale”),
the Holder shall have the right, in its sole discretion, to require that the Company redeem (each an “Asset Sale Optional Redemption”)
all, or any portion, of the Conversion Amount under this Note not in excess of (together with any Asset Sale Optional Redemption Amount
(as defined in the applicable other Note of the Holder) of any other Notes of the Holder) the Holder’s Holder Pro Rata Amount of
20% of the gross proceeds (including any insurance and condemnation proceeds with respect thereto) of such Eligible Asset Sale (the “Eligible
Asset Sale Optional Redemption Amount”) by delivering written notice thereof (an “Asset Sale Optional Redemption Notice”)
to the Company.
(b) Mechanics.
Each Asset Sale Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth in the applicable Asset Sale
Optional Redemption Notice, of the Eligible Asset Sale Optional Redemption Amount the Holder is electing to have redeemed (the “Asset
Sale Optional Redemption Amount”) and the date of such Asset Sale Optional Redemption (the “Asset Sale Optional Redemption
Date”), which shall be the later of (x) the fifth (5th) Business Day after the date of the applicable Asset Sale
Optional Redemption Notice and (y) the date of the consummation of such Eligible Asset Sale. The portion of the Conversion Amount of this
Note subject to redemption pursuant to this Section 10 shall be redeemed by the Company in cash at a price equal to 120% of the Asset
Sale Optional Redemption Amount being redeemed as of the Asset Sale Optional Redemption Date (the “Asset Sale Optional Redemption
Price”). Redemptions required by this Section 10 shall be made in accordance with the provisions of Section 13.
11. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation (as defined in the Securities
Purchase Agreement), or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue
or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect
the rights of the Holder of this Note. Without limiting the generality of the foregoing or any other provision of this Note or the other
Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon conversion
of this Note above the Conversion Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the conversion of this Note.
Notwithstanding anything herein to the contrary, if after the six (6) month anniversary of the Issuance Date, the Holder is not permitted
to convert this Note in full for any reason (other than pursuant to restrictions set forth in Section 3(d) hereof), the Company shall
use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary
to permit such conversion into shares of Common Stock.
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12. RESERVATION
OF AUTHORIZED SHARES.
(a) Reservation.
So long thereafter as any Notes remain outstanding, the Company shall reserve at least the number of shares of Common Stock as shall from
time to time be necessary to effect the conversion, including without limitation, Alternate Conversions, of all of the Notes then outstanding
(without regard to any limitations on conversions and assuming such Notes remain outstanding until the Maturity Date) at the Floor Price
then in effect (the “Required Reserve Amount”). The Required Reserve Amount (including, without limitation, each increase
in the number of shares so reserved) shall be allocated pro rata among the holders of the Notes based on the original principal amount
of the Notes held by each holder on the Closing Date or increase in the number of reserved shares, as the case may be (the “Authorized
Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee
shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount
of the Notes then held by such holders.
(b) Insufficient
Authorized Shares. If, notwithstanding Section 12(a), and not in limitation thereof, at any time while any of the Notes remain outstanding
the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve
for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized
Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than seventy-five (75) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting
of its shareholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the shareholders that they approve
such proposal. In the event that the Company is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due
to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common
Stock (such unavailable number of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such
Authorized Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount
convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure
Shares and (y) the greatest Closing Sale Price of the shares of Common Stock on any Trading Day during the period commencing on the date
the Holder delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and ending on the date
of such issuance and payment under this Section 12(a); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage commissions and
other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in Section 12(a) or this Section
12(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
13. REDEMPTIONS.
(a) Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days after the
Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Change of Control Redemption
Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder in cash
concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control
and within five (5) Business Days after the Company’s receipt of such notice otherwise. The Company shall deliver the applicable
Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. The Company shall deliver
the applicable Asset Sale Optional Redemption Price to the Holder in cash on the applicable Asset Sale Optional Redemption Date. The Company
shall deliver the applicable Subsequent Placement Optional Redemption Price to the Holder in cash on the applicable Subsequent Placement
Optional Redemption Date. Notwithstanding anything herein to the contrary,
20
in connection with any redemption hereunder at a time the Holder
is entitled to receive a cash payment under any of the other Transaction Documents, at the option of the Holder delivered in writing to
the Company, the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the Holder under
such other Transaction Document and, upon payment in full or conversion in accordance herewith, shall satisfy the Company’s payment
obligation under such other Transaction Document. In the event of a redemption of less than all of the Conversion Amount of this Note,
the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 20(d)) representing the
outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the Holder
within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall
have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing
the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any Late Charges
thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void
with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section
20(d)), to the Holder, and in each case the Principal of this Note or such new Note (as the case may be) shall be increased by an
amount equal to the difference between (1) the applicable Redemption Price (as the case may be, and as adjusted pursuant to this Section
13, if applicable) minus (2) the Principal portion of the Conversion Amount submitted for redemption and (z) the Conversion Price of this
Note or such new Notes (as the case may be) shall be automatically adjusted with respect to each conversion effected thereafter by the
Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) the
greater of (x) the Floor Price and (y) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including
the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable
Redemption Notice is voided and (C) the greater of (x) the Floor Price and (y) 75% of the quotient of (I) the sum of the five (5) lowest
VWAPs of the Common Stock during the twenty (20) consecutive Trading Day period ending and including the applicable Conversion Date divided
by (II) five (5) (it being understood and agreed that all such determinations shall be appropriately adjusted for any share dividend,
stock split, share combination or other similar transaction during such period). The Holder’s delivery of a notice voiding a Redemption
Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Late
Charges which have accrued prior to the date of such notice with respect to the Conversion Amount subject to such notice.
(b) Redemption
by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment
as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b) or Section 5(b) (each,
an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day of its receipt
thereof, forward to the Holder by electronic mail a copy of such notice. If the Company receives a Redemption Notice and one or more Other
Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is two (2) Business Days prior
to the Company’s receipt of the Holder’s applicable Redemption Notice and ending on and including the date which is two (2)
Business Days after the Company’s receipt of the Holder’s applicable Redemption Notice and the Company is unable to redeem
all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such
seven (7) Business Day period, then the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based
on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received
by the Company during such seven (7) Business Day period.
14. VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in
this Note.
15. COVENANTS.
Until all of the Notes (including the Other Notes that may be issued pursuant to the Securities Purchase Agreement from time to time)
have been converted, redeemed or otherwise satisfied in accordance with their terms:
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(a) Rank.
All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness
of the Company and its Subsidiaries (other than Permitted Equipment Indebtedness solely with respect to the Permitted Lien with respect
thereto).
(b) Incurrence
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, incur
or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes and
(ii) any other Permitted Indebtedness).
(c) Existence
of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow or suffer
to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts
and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens.
(d) Restricted
Payments and Investments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other
than the Notes and the Other Notes) whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness
or make any Investment, as applicable, if at the time such payment with respect to such Indebtedness and/or Investment, as applicable,
is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is
continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and
is continuing.
(e) Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.
(f) Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the Company
or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales,
leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries
in the ordinary course of business consistent with its past practice and (ii) sales of inventory and product (including but not limited
to any form of cryptocurrency produced by the Company and its Subsidiaries) in the ordinary course of business.
(g) Maturity
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, permit
any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date.
(h) Rules
of Principal Market. The Company shall maintain compliance with the continued listing requirements of the Principal Market, including
the stockholders’ equity requirement pursuant to Nasdaq Listing Rule 5550(b)(1).
(i) Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing
in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes
such qualification necessary.
(j) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its
properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and
tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is
a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.
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(k) Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable to
maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or any of its Subsidiaries
that are necessary or material to the conduct of its business in full force and effect.
(l) Maintenance
of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain director and officer’s insurance with
responsible and reputable insurance companies or associations in at least an aggregate amount of $5.0 million. The Company shall maintain,
and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties
(including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies
in similar businesses similarly situated.
(m) Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to,
any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property
or assets of any kind or the rendering of services of any kind) with any affiliate, except transactions in the ordinary course of business
in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction
with a Person that is not an affiliate thereof, including but not limited to, clause (iv) of the definition of the Permitted Indebtedness.
(n) Restricted
Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate
principal amount of the Notes then outstanding, (i) issue any promissory notes (other than as contemplated by this Note, the Securities
Purchase Agreement and the Other Notes) or (ii) issue any other securities that would cause a breach or default under this Notes or the
Other Notes.
(o) New
Subsidiaries. Simultaneously with the acquisition or formation of each New Subsidiary, the Company shall cause such New Subsidiary
to execute, and deliver to each holder of Notes, all Security Documents (as defined in the Securities Purchase Agreement) and Guaranties
(as defined in the Securities Purchase Agreement) as requested by the Collateral Agent or the Required Holders, as applicable. The Company
shall also deliver to the Collateral Agent an opinion of counsel to such New Subsidiary that is reasonably satisfactory to the Collateral
Agent and the Required Holders covering such legal matters with respect to such New Subsidiary becoming a guarantor of the Company’s
obligations, executing and delivering the Security Document and the Guaranties and any other matters that the Collateral Agent or the
Required Holders may reasonably request. The Company shall deliver, or cause the applicable Subsidiary to deliver to the Collateral Agent,
each of the physical share certificates of such New Subsidiary, along with undated share powers for each such certificates, executed in
blank (or, if any such shares of share capital are uncertificated, confirmation and evidence reasonably satisfactory to the Collateral
Agent and the Required Holders that the security interest in such uncertificated securities has been transferred to and perfected by the
Collateral Agent, in accordance with Sections 8-313, 8-321 and 9-115 of the Uniform Commercial Code or any other similar or local or foreign
law that may be applicable).
(p) Change
in Collateral; Collateral Records. The Company shall (i) give the Collateral Agent not less than thirty (30) days’ prior written
notice of any change in the location of any Collateral (as defined in the Security Documents), other than to locations set forth in the
Perfection Certificate (as defined in the Securities Purchase Agreement) hereto and with respect to which the Collateral Agent has filed
financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent promptly, in sufficient detail,
of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) execute
and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of the Holder and holders
of the Other Notes from time to time, solely for the Collateral Agent’s convenience in maintaining a record of Collateral, such
written statements and schedules as the Collateral Agent or any Holder may reasonably require, designating, identifying or describing
the Collateral.
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(q) Stay,
Extension and Usury Laws. To the extent that it may lawfully do so, the Company (A) agrees that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law (wherever or whenever enacted
or in force) that may affect the covenants or the performance of this Note; and (B) expressly waives all benefits or advantages of any
such law and agrees that it will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Holder
by this Note, but will suffer and permit the execution of every such power as though no such law has been enacted.
(r) Taxes.
The Company and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon
their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except
where the failure to pay would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries
). The Company and its Subsidiaries shall file on or before the due date therefor all personal property tax returns (except where the
failure to file would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries). Notwithstanding
the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings, taxes for which they maintain
adequate reserves therefor in accordance with GAAP.
(s) Available
Cash Test. Commencing on [•], 2026, and at any time thereafter that any Notes remain outstanding, the Company’s Available
Cash and cash equivalents produced by the Company and its Subsidiaries, as of the last calendar day in each Fiscal Quarter (each, a “Covenant
Measuring Date”) shall equal or exceed $750,000 (the “Available Cash Test”).
(t) Independent
Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and is continuing, (y) upon
the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z) at any time the
Holder reasonably believes an Event of Default may have occurred or be continuing, the Company shall hire an independent, reputable investment
bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Note has occurred (the “Independent
Investigator”). If the Independent Investigator determines that such breach of this Note has occurred, the Independent Investigator
shall notify the Company of such breach and the Company shall deliver written notice to each holder of a Note of such breach. In connection
with such investigation, the Independent Investigator may, during normal business hours, inspect all contracts, books, records, personnel,
offices and other facilities and properties of the Company and its Subsidiaries and, to the extent available to the Company after the
Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the accountants’ work
papers) and any books of account, records, reports and other papers not contractually required of the Company to be confidential or secret,
or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof
as the Independent Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and
operating data and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably
request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with, and
to make proposals and furnish advice with respect thereto to, the Company’s officers, directors, key employees and independent public
accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent Investigator
the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may
be reasonably requested. If a breach of this Note or any other Transaction Documents exists (or the Independent Investigator reasonably
determines that the Holder has a reasonable basis to believe a breach of this Note or any other Transaction Documents existed), the Company
shall be responsible for the reasonable fees and expenses of such Independent Investigator. If a breach of this Note or any other Transaction
Documents does not exist and the Independent Investigator reasonably determines that the Holder did not have reasonable basis to believe
a breach of this Note or any other Transaction Documents existed, the Holder shall be responsible for the reasonable fees and expenses
of such Independent Investigator.
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(u) Reverse
Stock Split.
(i) Current
Stock Split Authority. Within sixty (60) days from the Subscription Date (the “Stock Split Authority Deadline”),
the Company will obtain Reverse Stock Split Authority (as defined in the Securities Purchase Agreement).
(ii) Subsequent
Stock Split Authority. If, at any time within three (3) months following a reverse stock split pursuant to the Reverse Stock Split
Authority, the Company has the ability to effect an additional reverse stock split of the Common Stock at a ratio of less than 10-for-1
(each, a “Subsequent Stock Split Authority”), then, so long as any Notes remain outstanding, the board of directors
of the Company shall obtain authority from the stockholders of the Company to effect one or more additional reverse stock splits at a
ratio within the range from 5-for-1 up to 250-for-1 (each, a “Subsequent Stock Split Authority”) within forty five
(45) days after the date on which the Company is able to effect another reverse stock split (the “Subsequent Stock Split Authority
Deadline”).
16. SECURITY.
This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents (including, without limitation,
the Security Agreement, the other Security Documents and the Guaranties).
17. DISTRIBUTION
OF ASSETS. For so long as this Note or any Other Notes remain outstanding, the Company shall not declare or make any Distribution
(as defined below), without the prior written consent of the Required Holders.
In addition to any adjustments pursuant to Sections 6 and 7, if the Company shall declare or make any dividend or other distributions
of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise
(including without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the “Distributions”),
then the Holder will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note and assuming
for such purpose that the Note was converted at the Alternate Conversion Price as of the applicable record date) immediately prior to
the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for such Distributions (provided, however, that to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to beneficial
ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess)
and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its
right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times
the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent
Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
18. AMENDING
THE TERMS OF THIS NOTE. Except for Section 3(d) and this Section 18, which may not be amended, modified or waived by the parties hereto,
the prior written consent of the Required Holders shall be required for any change, waiver or amendment to this Note.
19. TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder
without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities Purchase Agreement.
20. REISSUANCE
OF THIS NOTE.
(a) Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Note (in accordance with Section 20(d)), registered as the Holder may request, representing
the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new
Note (in accordance with Section 20(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion
or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on
the face of this Note.
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(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence),
and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable
form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder
a new Note (in accordance with Section 20(d)) representing the outstanding Principal.
(c) Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Note or Notes (in accordance with Section 20(d) and in principal amounts of at least $1,000) representing in
the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal
as is designated by the Holder at the time of such surrender.
(d) Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be
of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or
in the case of a new Note being issued pursuant to Section 20(a) or Section 20(c), the Principal designated by the Holder which, when
added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face
of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and
(v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.
21. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and
consequential damages for any failure by the Company to comply with the terms of this Note. No failure on the part of the Holder to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise
by the Holder of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or
remedy. In addition, the exercise of any right or remedy of the Holder at law or equity or under this Note or any of the documents shall
not be deemed to be an election of Holder’s rights or remedies under such documents or at law or equity. The Company covenants to
the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth
or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received
by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that
the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary
and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of
proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation to the
Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of
this Note (including, without limitation, compliance with Section 7).
22. PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to
enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding,
including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts
due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal
amount hereof.
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23. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against
any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Note instead of just the provision in which
they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and
not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing
Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
24. FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 24 shall permit any waiver of any
provision of Section 3(d).
25. DISPUTE
RESOLUTION.
(a) Submission
to Dispute Resolution.
(i) In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Interest Conversion Price, an Alternate
Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate or the applicable Redemption Price
(as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or
the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2)
Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time after the Holder
learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating
to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Interest Conversion Price, such Alternate Conversion Price,
such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate or such applicable Redemption Price (as the
case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or the Holder (as
the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an
independent, reputable investment bank to resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 25 and (B) written documentation supporting its position with respect to such dispute, in each
case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder
selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding
clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood
and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank
prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested
by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
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(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder
of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of
such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 25 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the Nevada State arbitration law, (ii) a dispute relating to a Conversion Price
includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of shares of Common Stock occurred
under Section 7(a), (B) the consideration per share at which an issuance or deemed issuance of shares of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of shares of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether
a Dilutive Issuance occurred, (iii) the terms of this Note and each other applicable Transaction Document shall serve as the basis for
the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment
bank in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Note and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole
discretion, shall have the right to submit any dispute described in this Section 25 to any state or federal court sitting in the City
of Las Vegas, Clark County, Nevada in lieu of utilizing the procedures set forth in this Section 25 and (v) nothing in this Section 25
shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to
any matters described in this Section 25).
26. NOTICES;
CURRENCY; PAYMENTS.
(a) Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality
of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting
forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with respect to any dividend or distribution upon the shares of Common Stock,
(B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase shares, warrants, securities
or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.
(b) Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under
this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall
Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to,
or over, a period of time, the date of calculation shall be the final date of such period of time).
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(c) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein,
such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and
sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in
the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement),
provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company
with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to
be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day
which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shall
result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen
percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).
(d) Adjustment
Notices. Whenever the Conversion Price or the Floor Price is adjusted in accordance with the terms of this Note, the Company shall
promptly provide the Holder with a written notice setting forth the Conversion Price or the Floor Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
27. CANCELLATION.
After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
28. WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other
demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase
Agreement.
29. GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Nevada. Except as otherwise required by Section 25 above, the Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Las Vegas, Clark County, Nevada, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein (i) shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit,
or shall be deemed or construed to limit, any provision of Section 25. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
30. JUDGMENT
CURRENCY.
(a) If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert
into any other currency (such other currency being hereinafter in this Section 30 referred to as the “Judgment Currency”)
an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately
preceding:
29
(i) the
date actual payment of the amount due, in the case of any proceeding in the courts of Nevada or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 30(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).
(b) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 30(a)(ii) above, there is a change in the Exchange
Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(c) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Note.
31. SEVERABILITY.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining
provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of
the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question
does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
32. MAXIMUM
PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
33. CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Adjusted
Floor Price” means as determined on an Adjustment Date, the lower of (i) the Floor Price then in effect and (ii) 20% of the
lower of (x) the closing price of the Common Stock on the Principal Market (as reported by the Principal Market) as of the Trading Day
ended immediately prior to such applicable Adjustment Date and (y) the quotient of (I) the sum of each the closing prices of the Common
Stock on the Principal Market (as reported by the Principal Market) on each Trading Day on the five (5) Trading Day period ended on, and
including, the Trading Day ended immediately prior to such applicable Adjustment Date, divided by (II) five (5). All such determinations
to be appropriately adjusted for any share split, share dividend, share combination or other similar transaction during any such measuring
period.
30
(d) “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or
sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than rights of the type described in Section
6(a) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to,
such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(e) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly
or indirectly either to vote 10% or more of the shares having ordinary voting power for the election of directors of such Person or direct
or cause the direction of the management and policies of such Person whether by contract or otherwise.
(f) “Alternate
Conversion Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant to
wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the VWAP of the
Common Stock on the Trading Day immediately preceding the time that the Holder delivers the applicable Conversion Notice and (B) the difference
obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share
Delivery Deadline with respect to such Alternate Conversion from (II) the quotient obtained by dividing (x) the applicable Conversion
Amount that the Holder has elected to be the subject of the applicable Alternate Conversion, by (y) the applicable Alternate Conversion
Price without giving effect to clause (x) of such definition.
(g) “Alternate
Conversion Price” means, with respect to any Alternate Conversion that price which shall be the lower of (i) the applicable
Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion, and (ii) the greater of (x) the
Floor Price then in effect and (y)(1) with respect to any Alternate Optional Conversion, 90% of the lowest trading price of the Common
Stock, and (2) with respect to an Alternate Event of Default Conversion, 80% of the lowest trading price during the ten (10) consecutive
Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion
Notice (such period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted
for any share dividend, stock split, share combination, reclassification or similar transaction that proportionately decreases or increases
the shares of Common Stock during such Alternate Conversion Measuring Period.
(h) “Approved
Stock Plan” shall have the meaning as set forth in the Securities Purchase Agreement.
(i) “Asset
Sale” means any single transaction or series of related transactions (other than transactions in the ordinary course of business
consistent with past practice) by which the Company or any Subsidiary, directly or indirectly, sells, leases, licenses, assigns, transfers,
spins-off, splits-off, closes, conveys, or otherwise disposes of any assets or rights to such assets; provided, however, that the term
“Asset Sale” shall not include: (i) any sale, lease, license, assignment, transfer, spin-off, split-off, closure, conveyance,
or other disposition of inventory, products, or services in the ordinary course of business consistent with past practice; (ii) any sale,
lease, license, assignment, transfer, spin-off, split-off, closure, conveyance, or other disposition of immaterial obsolete, worn-out,
or surplus property or assets, or property or assets no longer used or useful in the business of the Company or any Subsidiary; (iii)
any sale, lease, license, assignment, transfer, spin-off, split-off, closure, conveyance, or other disposition of assets or rights to
such assets among the Company and its wholly owned Subsidiaries; (iv) any grant of a Lien permitted under the terms of this Note or the
Securities Purchase Agreement; (v) any disposition of cash or cash equivalents in the ordinary course of business; (vi) any disposition
of assets with an aggregate fair market value (as determined in good faith by the Company’s board of directors) of less than $500,000
in any fiscal year; and (vii) any other transaction approved in writing by the Required Holders (as defined in the Securities Purchase
Agreement).
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(j) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds
or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s
investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing,
(iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other
Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other
Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively
the Holder and all other Attribution Parties to the Maximum Percentage.
(k) “Available
Cash” means, with respect to any date of determination, an amount equal to the aggregate amount of the Cash of the Company and
its Subsidiaries (excluding for this purpose cash held in restricted accounts or otherwise unavailable for unrestricted use by the Company
or any of its Subsidiaries for any reason) as of such date of determination held in bank accounts of financial banking institutions in
the United States of America.
(l) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial
banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
(m) “Cash”
of the Company and its Subsidiaries on any date shall be determined from such Persons’ books maintained in accordance with GAAP,
and means, without duplication, the cash, cash equivalents and Eligible Marketable Securities accrued by the Company and its wholly owned
Subsidiaries on a consolidated basis on such date.
(n) “Change
of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the Common Stock
in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue
after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in
all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company or any of its Subsidiaries.
(o) “Change
of Control Redemption Premium” means 120%.
(p) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and
last closing trade price, respectively, for such security on the Principal Market, as reported by the Reporting Service, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case
may be) then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York time, as reported by
the Reporting Service, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such
security is listed or traded as reported by the Reporting Service, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported
by the Reporting Service, or, if no closing bid price or last trade price, respectively, is reported for such security by the Reporting
Service, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in The Pink
Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price or the Closing
Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing
Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be
resolved in accordance with the procedures in Section 25. All such determinations shall be appropriately adjusted for any stock splits,
share dividends, share combinations, recapitalizations or other similar transactions during such period.
32
(q) “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially issued
Notes pursuant to the terms of the Securities Purchase Agreement.
(r) “Common
Stock” means (i) the Company’s common stock, $0.0001 par value per share, and (ii) any capital stock into which such
shares of Common Stock shall have been exchanged or any shares of capital stock resulting from a reclassification of such shares of Common
Stock.
(s) “Conversion
Floor Price Condition” means that the relevant Alternate Conversion Price or Interest Conversion Price is being determined based
on clause (x) of such definition.
(t)
“Convertible Securities” means any shares or other security (other than Options) that
is at any time and under any circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise
entitles the holder thereof to acquire, any shares of Common Stock.
(u) “Current
Subsidiary” means any Person in which the Company on the Subscription Date, directly or indirectly, (i) owns any of the outstanding
share capital or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations
or administration of such Person, and all of the foregoing, collectively, “Current Subsidiaries”.
(v) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select Market, the
Nasdaq Global Market or the Principal Market.
(w) “Eligible
Marketable Securities” as of any date means marketable securities which would be reflected on a consolidated balance sheet of
the Company and its Subsidiaries prepared as of such date in accordance with GAAP, and which are permitted under the Company’s investment
policies as in effect on the Issuance Date or approved thereafter by the Company’s board of directors.
(x) “Equity
Conditions” means, with respect to a given date of determination: (i) on each day during the period beginning fifteen (15) calendar
days prior to such applicable date of determination and ending on and including such applicable date of determination either (x) one or
more Registration Statements filed pursuant to the Registration Rights Agreement shall be effective and the prospectus contained therein
shall be available on such applicable date of determination (with, for the avoidance of doubt, any shares of Common Stock previously sold
pursuant to such prospectus deemed unavailable) for the resale of all shares of Common Stock to be issued in connection with the event
requiring this determination (or issuable upon conversion of the Conversion Amount being redeemed, as applicable, in the event requiring
this determination at the Alternate Conversion Price then in effect (without regard to any limitations on conversion set forth herein))
(each, a “Required Minimum Securities Amount”), in each case, in accordance with the terms of the Registration Rights
Agreement and there shall not have been during such period any Grace Periods (as defined in the Registration Rights Agreement) or (y)
all Registrable Securities shall be eligible for sale pursuant to Rule 144 (as defined in the Securities Purchase Agreement) without the
need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of
the Notes, other issuance of securities with respect to the Notes) and no Current Public Information Failure (as defined in the Registration
Rights Agreement) exists or is continuing; (ii) on each day during the period beginning fifteen (15) calendar days prior to the applicable
date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”),
the shares of Common Stock (including all Registrable Securities) is listed or designated for quotation (as applicable) on an Eligible
Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and
occurring prior to the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension
by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice,
appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market
or (B) the Company falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then
listed or designated for quotation (as applicable); (iii) during the Equity Conditions Measuring Period,
33
the Company shall have delivered
all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth in Section 3 hereof and all other shares
of share capital required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) any shares
of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the Conversion Amount
being redeemed in the event requiring this determination) may be issued in full without violating Section 3(d) hereof; (v) any shares
of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the Conversion Amount
being redeemed in the event requiring this determination (without regards to any limitations on conversion set forth herein)) may be issued
in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation
(as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended
Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge
of any fact that would reasonably be expected to cause (1) any Registration Statement required to be filed pursuant to the Registration
Rights Agreement to not be effective or the prospectus contained therein to not be available for the resale of the applicable Required
Minimum Securities Amount of Registrable Securities in accordance with the terms of the Registration Rights Agreement or (2) any Registrable
Securities to not be eligible for sale pursuant to Rule 144 without the need for registration under any applicable federal or state securities
laws (in each case, disregarding any limitation on conversion of the Notes, other issuance of securities with respect to the Notes) and
no Current Public Information Failure exists or is continuing; (viii) the Holder shall not be in (and no other holder of Notes shall be
in) possession of any material, non-public information provided to any of them by the Company, any of its Subsidiaries or any of their
respective affiliates, employees, officers, representatives, agents or the like; (ix) on each day during the Equity Conditions Measuring
Period, the Company otherwise shall have been in compliance with each, and shall not have breached any representation or warranty in any
material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached
in any respect) or any covenant or other term or condition of any Transaction Document, including, without limitation, the Company shall
not have failed to timely make any payment pursuant to any Transaction Document; (x) there shall not have occurred any Volume Failure
or Price Failure as of such applicable date of determination; (xi) on the applicable date of determination (A) no Authorized Share Failure
shall exist or be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are available under the Amended
and Restated Articles of Incorporation of the Company and reserved by the Company to be issued pursuant to the Notes and (B) all shares
of Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion
Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion set forth herein)) may
be issued in full without resulting in an Authorized Share Failure; (xii) on each day during the Equity Conditions Measuring Period, there
shall not have occurred and there shall not exist an Event of Default or an event that with the passage of time or giving of notice would
constitute an Event of Default; (xiii) no bona fide dispute shall exist, by and between any of holder of Notes, the Company, the Principal
Market (or such applicable Eligible Market in which the Common Stock of the Company is then principally trading) and/or FINRA with respect
to any term or provision of any Note or any other Transaction Document and (xiv) the shares of Common Stock issuable pursuant the event
requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction on an
Eligible Market.
(y) “Equity
Conditions Failure” means that on any day during the period commencing fifteen (15) Trading Days prior to the applicable date
of determination, the Equity Conditions have not been satisfied (or waived in writing by the Holder).
(z) “Event
Market Price” means, with respect to any Share Combination Event Date, the quotient determined by dividing (x) the sum of the
VWAP of the Common Stock for each of the five (5) Trading Days with the lowest VWAP of the Common Stock during the fifteen (15) consecutive
Trading Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Share Combination
Event Date, divided by (y) five (5).
34
(aa) “Event
of Default Redemption Premium” means 130%.
(bb) “Excluded
Securities” shall have the meaning as set forth in the Securities Purchase Agreement.
(cc) “FactSet”
means FactSet Research Systems Inc.
(dd) “Fiscal
Quarter” means each of the fiscal quarters adopted by the Company for financial reporting purposes that correspond to the Company’s
fiscal year as of the date hereof that ends on December 31st.
(ee) “Floor
Price” means $[•][2] (as adjusted for stock
splits, stock dividends, stock combinations, recapitalizations and similar events), or, subject to the rules and regulations of the Principal
Market, such lower amount as the Company and the Required Holders shall mutually agree with respect to all Notes then outstanding, provided,
that if on the effective date of the Registration Statement and every six (6) months thereafter (each, an “Adjustment Date”),
the Floor Price then in effect is higher than the Adjusted Floor Price, with respect to the applicable Adjustment Date, subject to the
rules and regulations of the Principal Market on such Adjustment Date the Floor Price shall be automatically lowered to such applicable
Adjusted Floor Price.
(ff) “Fundamental
Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise,
in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another
Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of
the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities,
or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its shares of Common Stock
be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of
at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if
any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate,
acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such stock or share purchase agreement or other business combination were not outstanding; or (z) such number of shares
of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act)
of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, (B)
that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions,
allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender,
tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever,
of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock, (y) at
least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock not held by all such Subject
Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding,
or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring
other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C)
directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of
or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this
definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent
with the intended treatment of such instrument or transaction.
[2]
Insert 20% of the Nasdaq “Minimum Price” on the date of the Securities Purchase Agreement.
35
(gg) “GAAP”
means United States generally accepted accounting principles, consistently applied.
(hh) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(ii) “Holder
Pro Rata Amount” means a fraction (i) the numerator of which is the original Principal amount of this Note on the Closing Date
plus the original Principal amount of any Other Notes held by the Holder outstanding on the date of determination and (ii) the denominator
of which is the aggregate original principal amount of all Notes issued pursuant to the Securities Purchase Agreement on the Closing Date
plus the aggregate original Principal amount of any Other Notes outstanding on the date of determination.
(jj) “Indebtedness”
shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(kk) “Interest
Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect,
and (ii) the greater of (x) the Floor Price and (y) 90% of the lowest trading price of the Common Stock during the ten (10) consecutive
Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion
Notice. All such determinations to be appropriately adjusted for any stock split, share dividend, share combination or other similar transaction
during any such measuring period.
(ll) “Interest
Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant to wire instructions
delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher of (I) the highest price
that the Common Stock traded at on the Trading Day immediately preceding the relevant Interest Date and (II) the applicable Interest Conversion
Price and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder
on the applicable Share Delivery Deadline with respect to such Interest Date from (II) the quotient obtained by dividing (x) the applicable
Conversion Amount that the Holder has elected to be the subject of the applicable Interest Date, by (y) the applicable Interest Conversion
Price without giving effect to clause (x) of such definition.
(mm) “Interest
Date” means [•], 2026 and the first calendar day of each Fiscal Quarter thereafter.
(nn) “Interest
Rate” means, as of any date of determination, eight and one quarter percent (8.25%) per annum, subject to adjustment from time
to time in accordance with Section 2.
(oo) “Investment”
means any beneficial ownership (including shares, stock, partnership or limited liability company interests) of or in any Person, or
any loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another
Person or the purchase of any assets of another Person for greater than the fair market value of such assets.
(pp) “Maturity
Date” shall mean [•][3]; provided, however,
the Maturity Date may be extended for an additional six (6) months by mutual written consent of the Company and the Holder or at the option
of the Holder (i) in the event that, and for so long as, an Event of Default shall have occurred and be continuing or any event shall
have occurred and be continuing that with the passage of time and the failure to cure would result in an Event of Default or (ii) through
the date that is twenty (20) Business Days after the consummation of a Fundamental Transaction in the event that a Fundamental Transaction
is publicly announced or a Change of Control Notice is delivered prior to the Maturity Date, provided further that if a Holder elects
to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion Amount would be limited pursuant to Section 3(d)
hereunder, the Maturity Date shall automatically be extended until such time as such provision shall not limit the conversion of this
Note.
[3]
Insert second anniversary of the applicable Issuance Date.
36
(qq) “New
Subsidiary” means, as of any date of determination, any Person in which the Company after the Subscription Date, directly or
indirectly, (i) owns or acquires more than 50% of the of the outstanding share capital or holds more than 50% of the equity or similar
interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “New Subsidiaries”.
(rr) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(ss) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(tt) “Permitted
Equipment Indebtedness” means Indebtedness secured by Permitted Liens or unsecured but, in each case, as described in clauses
(iv) and (v) of the definition of Permitted Liens.
(uu) “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness set forth on Schedule 3(s)
to the Securities Purchase Agreement, as in effect as of the Issuance Date, and (iii) Permitted Equipment Indebtedness in an aggregate
amount not to exceed $250,000.
(vv) “Permitted
Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising in the ordinary course of business
by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien created by operation of law, such as
materialmen’s liens, mechanics’ liens and other similar liens, arising in the ordinary course of business with respect to
a liability that is not yet due or delinquent or that are being contested in good faith by appropriate proceedings, (iv) Liens (A) upon
or in any equipment acquired or held by the Company or any of its Subsidiaries to secure the purchase price of such equipment or Indebtedness
incurred solely for the purpose of financing the acquisition or lease of such equipment, or (B) in connection with the acquisition or
refinancing of such equipment, provided that the Lien is confined solely to the property so acquired and improvements thereon, and the
proceeds of such equipment, in either case, with respect to Indebtedness in an aggregate amount not to exceed $250,000, (v) Liens
incurred in connection with the extension, renewal or refinancing of the Indebtedness secured by Liens of the type described in clause
(iv) above, provided that any extension, renewal or replacement Lien shall be limited to the property encumbered by the existing Lien
and the principal amount of the Indebtedness being extended, renewed or refinanced does not increase, (vi) Liens in favor of customs and
revenue authorities arising as a matter of law to secure payments of custom duties in connection with the importation of goods, and (vii)
Liens arising from judgments, decrees or attachments in circumstances not constituting an Event of Default under Section 4(a)(xii).
(ww) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a company, a corporation, a trust, an unincorporated
organization, any other entity or a government or any department or agency thereof.
(xx) “Price
Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock during the twenty (20) Trading
Day period ending on the Trading Day immediately preceding such date of determination fails to exceed $5.00 per share of Common Stock
(as adjusted for any stock splits, share dividends, share combinations, recapitalizations or other similar transactions occurring after
the Issuance Date).
(yy) “Prime
Rate” means the “prime rate” which from time to time published in the “Money Rates” column of The Wall
Street Journal (Eastern Edition, New York Metro); provided, however, if the Money Rates column of The Wall Street Journal (Eastern Edition,
New York Metro) ceases to be published or otherwise does not designate a “prime rate” as of a Business Day, the Holder has
the right to obtain such information from a similar business publication of its selection.
(zz) “Principal
Market” means the Nasdaq Capital Market.
37
(aaa) “Redemption
Notices” means, collectively, the Optional Redemption Notices, the Event of Default Redemption Notices, the Asset Sale Optional
Redemption Notices, the Subsequent Placement Optional Redemption Notices and the Change of Control Redemption Notices, and each of the
foregoing, individually, a “Redemption Notice.”
(bbb) “Redemption
Prices” means, collectively, the Optional Redemption Price, the Event of Default Redemption Price, the Asset Sale Optional Redemption
Price, the Change of Control Redemption Price and the Subsequent Placement Optional Redemption Price, and each of the foregoing, individually,
a “Redemption Price.”
(ccc) “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Initial Closing Date, by and among the Company
and the initial holders of the Notes relating to, among other things, the registration of the resale of the shares of Common Stock issuable
upon conversion of the Notes or otherwise pursuant to the terms of the Notes, as may be amended from time to time.
(ddd) “Reporting
Service” means either Bloomberg L.P. or FactSet Research Systems Inc., as determined by Investor from time to time.
(eee) “Revenue”
means, with respect to any given cash flow, receivable or other general intangible, the revenue directly attributable thereto of the Company
or any of its Subsidiaries, as determined in accordance with GAAP.
(fff) “SEC”
means the United States Securities and Exchange Commission or the successor thereto.
(ggg) “Securities
Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company
and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to time.
(hhh) “Security
Agreement” shall have the meaning as set forth in the Securities Purchase Agreement.
(iii) “Stockholder
Approval” shall have the meaning as set forth in the Securities Purchase Agreement.
(jjj) “Subscription
Date” means July 16, 2026.
(kkk) “Subsidiaries”
means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing, individually,
a “Subsidiary.”
(lll) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(mmm) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been
entered into.
(nnn) “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the shares of Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for
the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less
than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market
(or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour
ending at 4:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect
to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any
successor thereto) is open for trading of securities.
38
(ooo) “Volume
Failure” means, with respect to a particular date of determination, the aggregate daily dollar trading volume (as reported on
the Reporting Service) of the Common Stock on the Principal Market on any Trading Day during the fifteen (15) Trading Day period ending
on the Trading Day immediately preceding such date of determination (such period, the “Volume Failure Measuring Period”),
is less than $500,000 (as adjusted for any stock splits, share dividends, share combinations, recapitalizations or other similar transactions
occurring after the Issuance Date).
(ppp) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by the Reporting Service through its “VAP” function (set to 09:30 start time and 16:00 end time) or FactSet or,
if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported
by the Reporting Service, or, if no dollar volume-weighted average price is reported for such security by the Reporting Service for such
hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as
reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot
be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved in accordance with the procedures in Section 25. All such determinations shall be
appropriately adjusted for any share dividend, stock split, share combination, recapitalization or other similar transaction during such
period.
34. DISCLOSURE.
Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this
Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public
information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 a.m., New York time, on the Business
Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form
8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt
of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the
Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the
notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this
Section 34 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
35. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company
and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain
from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an
officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed,
written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may
possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information
to any third party.
[signature page follows]
39
IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed as of the Issuance Date set forth above.
SADOT
GROUP INC.
By:
Name:
Haggai Ravid
Title:
Chief Executive Officer
Senior
Convertible Promissory Note - Signature Page
EXHIBIT
I
SADOT GROUP INC.
CONVERSION NOTICE
Reference is made to the Senior
Secured Convertible Promissory Note (the “Note”) issued to the undersigned by Sadot Group Inc., a Nevada corporation
(the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.0001 par value per share (the “Common
Stock”), of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set
forth in the Note.
Date of Conversion:
Aggregate Principal to be converted:
Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted:
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:
Please confirm the following information:
Conversion Price:
Number of shares of Common Stock to be issued:
If this Conversion Notice is being
delivered with respect to an Alternate Conversion, check here if Holder is electing to use the following Alternate Conversion Price:____________
Please issue the shares of Common Stock into which
the Note is being converted to Holder, or for its benefit, as follows:
Check here if requesting
delivery as a certificate to the following name and to the following address:
Issue to:
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
DTC Participant:
DTC Number:
Account Number:
Date: _____________ __, ____
_________________________
Name of Registered Holder
By:
Name:
Title:
Tax ID:_____________________
E-mail Address:
Exhibit II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges
this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not] eligible to be resold by
the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and delivery to the Company of a customary 144 representation
letter) or (ii) an effective and available registration statement and (c) hereby directs _________________ to issue the above indicated
number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged
and agreed to by ________________________.
SADOT GROUP INC.
By:
Name: Haggai Ravid
Title: Chief Executive Officer
EX-4.2 — EXHIBIT 4.2
EX-4.2
Filename: e7788_ex4-2.htm · Sequence: 4
EXHIBIT 4.2
NEITHER THIS NOTE NOR THE SECURITIES INTO WHICH
THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE. THESE
SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH
A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY
REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTIONS 3(c)(iii) AND 20(a) HEREOF. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 3(c)(iii)
OF THIS NOTE.
THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT
(“OID”). PURSUANT TO TREASURY REGULATION §1.1275-3(b)(1). THE COMPANY WILL, BEGINNING TEN DAYS AFTER THE ISSUANCE DATE
OF THIS NOTE, PROMPTLY MAKE AVAILABLE TO THE HOLDER UPON REQUEST THE INFORMATION DESCRIBED IN TREASURY REGULATION §1.1275-3(b)(1)(i).
THE COMPANY MAY BE REACHED AT TELEPHONE NUMBER (832) 604-9568.
sadot group
inc.
Senior Secured
Convertible Promissory Note
Due July
16, 2028
Issuance Date: July 16, 2026
Original Principal Amount: U.S. $4,000,000
FOR VALUE RECEIVED, Sadot
Group Inc., a Nevada corporation (the “Company”), hereby promises to pay to the order of [•] or its registered
assigns (the “Holder”) the amount set forth above as the Original Principal Amount (or such lesser amount as reduced
pursuant to the terms hereof pursuant to repayment, redemption, conversion or otherwise, the “Principal”) when due,
whether upon the Maturity Date, or upon acceleration, redemption or otherwise (in each case in accordance with the terms hereof) and to
pay interest (“Interest”) on any outstanding Principal at the applicable Interest Rate (as defined below) from the
date set forth above as the Issuance Date (the “Issuance Date”) until the same becomes due and payable, whether upon
the Maturity Date, or upon acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). This
Senior Secured Convertible Promissory Note (including all Senior Secured Convertible Promissory Notes issued in exchange, transfer or
replacement hereof, this “Note”) is one of an issue of Senior Secured Convertible Promissory Notes issued pursuant
to that certain Securities Purchase Agreement, dated as of July 16, 2026 (the “Subscription Date”), by and among the
Company and the investors (the “Buyers”) referred to therein, as amended from time to time (collectively, the “Notes”,
and such other Senior Secured Convertible Promissory Notes, the “Other Notes”). Certain capitalized terms used herein
are defined in Section 33.
1. PAYMENTS
OF PRINCIPAL. On the Maturity Date, the Company shall pay to the Holder an amount in cash (excluding any amounts paid in shares of
Common Stock on the Maturity Date in accordance with Section 9) representing all outstanding Principal, accrued and unpaid Interest and
accrued and unpaid Late Charges (as defined in Section 26(c)) on such Principal and Interest. Other than as specifically permitted by
this Note, the Company may not prepay or redeem any portion of the outstanding Principal, accrued and unpaid Interest or accrued and unpaid
Late Charges on Principal and Interest, if any.
2. INTEREST;
INTEREST RATE.
(a) Interest
on this Note shall commence accruing on the Issuance Date and shall accrue on all outstanding Principal and shall be computed on the basis
of a 360-day year and twelve 30-day months and shall be payable in arrears on the first calendar day of each Fiscal Quarter (as defined
below) (each, an “Interest Date”) with the first Interest Date being October 1, 2026. Interest shall be payable on
each Interest Date, to the Holder on the applicable Interest Date, in shares of Common Stock (“Interest Shares”) so
long as there has been no Equity Conditions Failure; provided however, that the Company may, at its option following notice to the Holder,
pay Interest on any Interest Date in cash (“Cash Interest”) or in a combination of Cash Interest and Interest Shares.
The Company shall deliver a written notice (each, an “Interest Election Notice”) to the Holder on or prior to the sixth
(6th) Trading Day prior to the applicable Interest Date (the date such notice is delivered to all of the holders of Notes,
the “Interest Notice Date”) which notice (i) either (A) confirms that Interest to be paid on such Interest Date shall
be paid entirely in Interest Shares or (B) elects to pay Interest as Cash Interest or a combination of Cash Interest and Interest Shares
and specifies the amount of Interest that shall be paid as Cash Interest and the amount of Interest, if any, that shall be paid in Interest
Shares and (ii) certifies that there has been no Equity Conditions Failure. If an Equity Conditions Failure has occurred as of the Interest
Notice Date, then unless the Company has elected to pay such Interest as Cash Interest, the Interest Election Notice shall indicate that
unless the Holder waives the Equity Conditions Failure, the Interest shall be paid as Cash Interest. Notwithstanding anything herein to
the contrary, if no Equity Conditions Failure has occurred as of the Interest Notice Date but an Equity Conditions Failure occurs at any
time prior to the Interest Date, (A) the Company shall provide the Holder a subsequent notice to that effect and (B) unless the Holder
waives the Equity Conditions Failure, the Interest shall be paid in cash. Interest to be paid on an Interest Date in Interest Shares shall
be paid in a number of fully paid and nonassessable shares (rounded to the nearest whole share in accordance with Section 3(a)) of Common
Stock equal to the quotient of (1) the amount of Interest payable on such Interest Date less any Cash Interest paid and (2) the Interest
Conversion Price in effect on the applicable Interest Date.
2
(b) When
any Interest Shares are to be paid on an Interest Date, the Company shall (i) (A) provided that the Company’s transfer agent (the
“Transfer Agent”) is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer Program (“FAST”), credit such aggregate number of Interest Shares to which the Holder shall be entitled to
the Holder’s or its designee’s balance account with DTC through its Deposit/Withdrawal at Custodian system, or (B) if the
Transfer Agent is not participating in FAST, issue and deliver on the applicable Interest Date, to the address set forth in the register
maintained by the Company for such purpose pursuant to the Securities Purchase Agreement or to such address as specified by the Holder
in writing to the Company at least two (2) Business Days prior to the applicable Interest Date, a certificate or statement of book-entry,
registered in the name of the Holder or its designee, for the number of Interest Shares to which the Holder shall be entitled which certificate
or statement of book-entry shall not bear any restrictive legends unless required pursuant to the rules and regulations of the Commission,
and (ii) with respect to each Interest Date, pay to the Holder, in cash by wire transfer of immediately available funds, the amount of
any Cash Interest; provided further, that, in the event of the Conversion Floor Price Condition, on the applicable Interest Date the Company
shall also deliver to the Holder the applicable Interest Floor Amount.
(c) Prior
to the payment of Interest on an Interest Date, Interest on this Note shall accrue at the Interest Rate on all outstanding principal amounts
and be payable by way of inclusion of the Interest in the Conversion Amount on each Conversion Date in accordance with Section 3(b)(i)
or upon any redemption in accordance with Section 13 or any required payment upon any Bankruptcy Event of Default. From and after the
occurrence and during the continuance of any Event of Default, the Interest Rate shall automatically be adjusted on each Trading Day in
which an Event of Default is continuing to the sum of (x) the Interest Rate then in effect on such date of determination and (y) nine
percent (9.0%) per annum (the “Default Rate”). In the event that such Event of Default is subsequently cured (and no
other Event of Default then exists, including, without limitation, for the Company’s failure to pay such Interest at the Default
Rate on the applicable Interest Date), the adjustment referred to in the preceding sentence shall cease to be effective as of the calendar
day immediately following the date of such cure; provided that the Interest as calculated and unpaid at such increased rate during the
continuance of such Event of Default shall continue to apply to the extent relating to the days after the occurrence of such Event of
Default through and including the date of such cure of such Event of Default.
3. CONVERSION
OF NOTES. At any time after the date hereof, this Note shall be convertible into validly issued, fully paid and non-assessable shares
of Common Stock, on the terms and conditions set forth in this Section 3.
(a) Conversion
Right. Subject to the provisions of Section 3(d), at any time or times on or after the date hereof, the Holder shall be entitled to
convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into validly issued, fully paid and non-assessable
shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below). The Company shall not issue any fraction
of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer,
stamp, issuance and similar taxes, costs and expenses (including, without limitation, fees and expenses of the Transfer Agent (as defined
below)) that may be payable with respect to the issuance and delivery of shares of Common Stock upon conversion of any Conversion Amount.
3
(b) Conversion
Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).
(i) “Conversion
Amount” means the sum of (x) the portion of the Principal to be converted, redeemed or otherwise with respect to which this
determination is being made, (y) all accrued and unpaid Interest with respect to such portion of the Principal amount and accrued and
unpaid Late Charges with respect to such portion of such Principal and such Interest, if any, and (z) any other unpaid amounts pursuant
to the Transaction Documents, if any.
(ii) “Conversion
Price” means, as of any Conversion Date or other date of determination, $17.81, subject to adjustment as provided herein.
(c) Mechanics
of Conversion.
(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a “Conversion Date”), the
Holder shall deliver (whether via electronic mail or otherwise), for receipt on or prior to 11:59 p.m., New York time, on such date, a
copy of an executed notice of conversion in the form attached hereto as Exhibit I (each, a “Conversion Notice”)
to the Company. If required by Section 3(c)(iii), within one (1) Trading Day following a conversion of this Note as aforesaid, the Holder
shall surrender this Note to a nationally recognized overnight delivery service for delivery to the Company (or an indemnification undertaking
with respect to this Note in the case of its loss, theft or destruction as contemplated by Section 20(b)). the date of receipt of a Conversion
Notice, the Company shall transmit by electronic mail an acknowledgment, in the form attached hereto as Exhibit II, of confirmation
of receipt of such Conversion Notice and representation as to whether such shares of Common Stock may then be resold pursuant to Rule
144 or an effective and available registration statement (each, an “Acknowledgement”) to the Holder and the Transfer
Agent which confirmation shall constitute an instruction to the Transfer Agent to process such Conversion Notice in accordance with the
terms herein. On or before the first (1st) Trading Day following the date on which the Company has received a Conversion Notice
(or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement of a trade initiated
on the applicable Conversion Date of such shares of Common Stock issuable pursuant to such Conversion Notice) (the “Share Delivery
Deadline”), the Company shall (1) provided that the Transfer Agent is participating in FAST, credit such aggregate number of
shares of Common Stock to which the Holder shall be entitled pursuant to such conversion to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian system or (2) if the Transfer Agent is not participating in FAST,
upon the request of the Holder, issue and deliver (via reputable
4
overnight courier) to the address as specified in the Conversion Notice,
a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall
be entitled pursuant to such conversion. If this Note is physically surrendered for conversion pursuant to Section 3(c)(iii) and the outstanding
Principal of this Note is greater than the Principal portion of the Conversion Amount being converted, then the Company shall as soon
as practicable and in no event later than two (2) Business Days after receipt of this Note and at its own expense, issue and deliver to
the Holder (or its designee) a new Note (in accordance with Section 20(d)) representing the outstanding Principal not converted. The Person
or Persons entitled to receive the shares of Common Stock issuable upon a conversion of this Note shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on the Conversion Date; provided, that the Holder shall be deemed to have
waived any voting rights of any such shares of Common Stock that may arise during the period commencing on such Conversion Date, through,
and including, such applicable Share Delivery Deadline (each, an “Conversion Period”), as necessary, such that the
aggregate voting rights of any shares of Common Stock beneficially owned by the Holder and/or any Attribution Parties, collectively, on
any such applicable date shall not exceed the Maximum Percentage (as defined below) as a result of any such conversion of this Note. Notwithstanding
anything to the contrary contained in this Note or the Registration Rights Agreement, after the effective date of the Registration Statement
(as defined in the Registration Rights Agreement) and prior to the Holder’s receipt of the notice of a Grace Period (as defined
in the Registration Rights Agreement), the Company shall cause the Transfer Agent to deliver unlegended shares of Common Stock to the
Holder (or its designee) in connection with any sale of Registrable Securities (as defined in the Registration Rights Agreement) with
respect to which the Holder has entered into a contract for sale, and delivered a copy of the prospectus included as part of the particular
Registration Statement to the extent applicable, and for which the Holder has not yet settled.
(ii) Company’s
Failure to Timely Convert. If the Company shall fail, for any reason or for no reason, on or prior to the applicable Share Delivery
Deadline, either (I) if the Transfer Agent is not participating in FAST, to issue and deliver to the Holder (or its designee) a certificate
for the number of shares of Common Stock to which the Holder is entitled and register such shares of Common Stock on the Company’s
share register or, if the Transfer Agent is participating in FAST, to credit the balance account of the Holder or the Holder’s designee
with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s conversion of this Note (as
the case may be) or (II) if the Registration Statement covering the resale of the shares of Common Stock that are the subject of the Conversion
Notice (the “Unavailable Conversion Shares”) is not available for the resale of such Unavailable Conversion Shares
and the Company fails to promptly, but in no event later than as required pursuant to the Registration Rights Agreement (x) so notify
the Holder and (y) deliver the shares of Common Stock electronically without any restrictive legend by crediting such aggregate number
of shares of Common Stock to which the Holder is entitled pursuant to such conversion to the Holder’s or its designee’s balance
account with DTC through its Deposit/Withdrawal At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter
5
referred as a “Notice Failure” and together with the event described in clause (I) above, a “Conversion Failure”),
then, in addition to all other remedies available to the Holder, (1) the Company shall pay in cash to the Holder on each day after such
Share Delivery Deadline that the issuance of such shares of Common Stock is not timely effected an amount equal to 2.0% of the product
of (A) the sum of the number of shares of Common Stock not issued to the Holder on or prior to the applicable Share Delivery Deadline
and to which the Holder is entitled, multiplied by (B) any trading price of the Common Stock selected by the Holder in writing as in effect
at any time during the period beginning on the applicable Conversion Date and ending on the applicable Share Delivery Deadline and (2)
the Holder, upon written notice to the Company, may void its Conversion Notice with respect to, and retain or have returned (as the case
may be) any portion of this Note that has not been converted pursuant to such Conversion Notice, provided that the voiding of a Conversion
Notice shall not affect the Company’s obligations to make any payments which have accrued prior to the date of such notice pursuant
to this Section 3(c)(ii) or otherwise. In addition to the foregoing, if on or prior to the Share Delivery Deadline either (A) if the Transfer
Agent is not participating in FAST, the Company shall fail to issue and deliver to the Holder (or its designee) a certificate and register
such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating in FAST, the Transfer Agent
shall fail to credit the balance account of the Holder or the Holder’s designee with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s conversion hereunder or pursuant to the Company’s obligation pursuant to
clause (II) below or (B) a Notice Failure occurs, and if on or after such Share Delivery Deadline the Holder acquires (in an open market
transaction, stock loan or otherwise) shares of Common Stock corresponding to all or any portion of the number of shares of Common Stock
issuable upon such conversion that the Holder is entitled to receive from the Company and has not received from the Company in connection
with such Conversion Failure or Notice Failure, as applicable (a “Buy-In”), then, in addition to all other remedies
available to the Holder, the Company shall, within one (1) Business Day after receipt of the Holder’s request and in the Holder’s
discretion, either: (I) pay cash to the Holder in an amount equal to the Holder’s total purchase price (including brokerage commissions,
stock loan costs and other out-of-pocket expenses, if any) for the shares of Common Stock so acquired (including, without limitation,
by any other Person in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s
obligation to so issue and deliver such certificate (and to issue such shares of Common Stock) or credit the balance account of such Holder
or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to which the Holder is entitled upon
the Holder’s conversion hereunder (as the case may be) (and to issue such shares of Common Stock) shall terminate, or (II) promptly
honor its obligation to so issue and deliver to the Holder a certificate or certificates representing such shares of Common Stock or credit
the balance account of such Holder or such Holder’s designee, as applicable, with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion hereunder (as the case may be) and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product of (x) such number of shares of Common Stock multiplied by (y) the lowest
Closing Sale Price of the Common Stock on any Trading Day during the period commencing on the date of the applicable Conversion Notice
and ending on the date of such issuance and payment under this clause (II) (the “Buy-In Payment Amount”). Nothing shall
limit the Holder’s right to pursue any other remedies available to it hereunder, at law or in equity, including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock (or to electronically deliver such shares of Common Stock) upon the conversion of this Note as required pursuant
to the terms hereof.
6
(iii) Registration;
Book-Entry. The Company shall maintain a register (the “Register”) for the recordation of the names and addresses
of the holders of each Note and the principal amount of the Notes held by such holders (the “Registered Notes”). The
entries in the Register shall be conclusive and binding for all purposes absent manifest error. The Company and the holders of the Notes
shall treat each Person whose name is recorded in the Register as the owner of a Note for all purposes (including, without limitation,
the right to receive payments of Principal and Interest hereunder) notwithstanding notice to the contrary. A Registered Note may be assigned,
transferred or sold in whole or in part only by registration of such assignment or sale on the Register. Upon its receipt of a written
request to assign, transfer or sell all or part of any Registered Note by the registered holder thereof, the Company shall record the
information contained therein in the Register and issue one or more new Registered Notes in the same aggregate principal amount as the
principal amount of the surrendered Registered Note to the designated assignee or transferee pursuant to Section 20, provided that
if the Company does not so record an assignment, transfer or sale (as the case may be) of all or part of any Registered Note within two
(2) Business Days of such a request, then the Register shall be automatically deemed updated to reflect such assignment, transfer or sale
(as the case may be). Notwithstanding anything to the contrary set forth in this Section 3, following conversion of any portion of
this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless
(A) the full Conversion Amount represented by this Note is being converted (in which event this Note shall be delivered to the Company
following conversion thereof as contemplated by Section 3(c)(i)) or (B) the Holder has provided the Company with prior written notice
(which notice may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder
and the Company shall maintain records showing the Principal, Interest and Late Charges converted and/or paid (as the case may be) and
the dates of such conversions and/or payments (as the case may be) or shall use such other method, reasonably satisfactory to the Holder
and the Company, so as not to require physical surrender of this Note upon conversion. If the Company does not update the Register to
record such Principal, Interest and Late Charges converted and/or paid (as the case may be) and the dates of such conversions and/or payments
(as the case may be) within two (2) Business Days of such occurrence, then the Register shall be automatically deemed updated to reflect
such occurrence.
(iv) Pro
Rata Conversion; Disputes. In the event that the Company receives a Conversion Notice from more than one holder of Notes for the same
Conversion Date and the Company can convert some, but not all, of such portions of the Notes submitted for conversion, the Company, subject
to Section 3(d), shall convert from each holder of Notes electing to have Notes converted on such date a pro rata amount of such holder’s
portion of its Notes submitted for conversion based on the principal amount of Notes submitted for conversion on such date by such holder
relative to the aggregate principal amount of all Notes submitted for conversion on such date. In the event of a dispute as to the number
of shares of Common Stock issuable to the Holder in connection with a conversion of this Note, the Company shall issue to the Holder the
number of shares of Common Stock not in dispute and resolve such dispute in accordance with Section 25.
7
(d) Limitations
on Conversions.
(i) Beneficial
Ownership. The Company shall not effect the conversion of any portion of this Note, and the Holder shall not have the right to convert
any portion of this Note pursuant to the terms and conditions of this Note and any such conversion shall be null and void and treated
as if never made, to the extent that after giving effect to such conversion, the Holder together with the other Attribution Parties collectively
would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of Common Stock outstanding immediately
after giving effect to such conversion. For purposes of the foregoing sentence, the aggregate number of shares of Common Stock beneficially
owned by the Holder and the other Attribution Parties shall include the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon conversion of this Note with respect to which the determination
of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (A) conversion of the remaining,
nonconverted portion of this Note beneficially owned by the Holder or any of the other Attribution Parties and (B) exercise or conversion
of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any convertible notes
or shares of convertible preferred stock or warrants) beneficially owned by the Holder or any other Attribution Party subject to a limitation
on conversion or exercise analogous to the limitation contained in this Section 3(d). For purposes of this Section 3(d), beneficial ownership
shall be calculated in accordance with Section 13(d) of the 1934 Act. For purposes of determining the number of outstanding shares of
Common Stock the Holder may acquire upon the conversion of this Note without exceeding the Maximum Percentage, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the Company’s most recent Annual Report on Form 10-K, Quarterly
Report on Form 10-Q, Current Report on Form 8-K or other public filing with the SEC, as the case may be, (y) a more recent public announcement
by the Company or (z) any other written notice by the Company or the Transfer Agent, if any, setting forth the number of shares of Common
Stock outstanding (the “Reported Outstanding Share Number”). If the Company receives a Conversion Notice from the Holder
at a time when the actual number of outstanding shares of Common Stock is less than the Reported Outstanding Share Number, the Company
shall notify the Holder in writing of the number of shares of Common Stock then outstanding and, to the extent that such Conversion Notice
would otherwise cause the Holder’s beneficial ownership, as determined pursuant to this Section 3(d), to exceed the Maximum Percentage,
the
8
Holder must notify the Company of a reduced number of shares of Common Stock to be purchased pursuant to such Conversion Notice. For
any reason at any time, upon the written or oral request of the Holder, the Company shall within one (1) Business Day confirm orally and
in writing or by electronic mail to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this
Note, by the Holder and any other Attribution Party since the date as of which the Reported Outstanding Share Number was reported. In
the event that the issuance of shares of Common Stock to the Holder upon conversion of this Note results in the Holder and the other Attribution
Parties being deemed to beneficially own, in the aggregate, more than the Maximum Percentage of the number of outstanding shares of Common
Stock (as determined under Section 13(d) of the 1934 Act), the number of shares so issued by which the Holder’s and the other Attribution
Parties’ aggregate beneficial ownership exceeds the Maximum Percentage (the “Excess Shares”) shall be deemed
null and void and shall be cancelled ab initio, and the Holder shall not have the power to vote or to transfer the Excess Shares. Upon
delivery of a written notice to the Company, the Holder may from time to time increase (with such increase not effective until the sixty-first
(61st) day after delivery of such notice) or decrease the Maximum Percentage to any other percentage not in excess of 9.99%
as specified in such notice; provided that (i) any such increase in the Maximum Percentage will not be effective until the sixty-first
(61st) day after such notice is delivered to the Company and (ii) any such increase or decrease will apply only to the Holder
and the other Attribution Parties and not to any other holder of Notes that is not an Attribution Party of the Holder. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms of this Note in excess of the Maximum Percentage shall not be deemed
to be beneficially owned by the Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No
prior inability to convert this Note pursuant to this paragraph shall have any effect on the applicability of the provisions of this paragraph
with respect to any subsequent determination of convertibility. The provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this Section 3(d) to the extent necessary to correct this paragraph (or
any portion of this paragraph) which may be defective or inconsistent with the intended beneficial ownership limitation contained in this
Section 3(d) or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitation contained
in this paragraph may not be amended, modified or waived and shall apply to a successor holder of this Note.
(ii) Principal
Market Limitation. Notwithstanding anything in this Note to the contrary, the Company shall not issue any shares of Common Stock upon
conversion of this Note or the Other Notes, or otherwise, if the issuance of such shares of Common Stock, together with the issuance of
shares of Common Stock upon the conversion of any Other Notes issuable pursuant to the Securities Purchase Agreement and with any other
related transactions that may be considered part of the same series of transactions, would exceed the aggregate number shares of Common
Stock that the Company may issue in a transaction in compliance with the Company’s obligations under the rules or regulations of
the Principal Market and shall be referred to as the “Exchange Cap,” except that such limitation shall not apply if
the Company has obtained Stockholder Approval.
9
(e) Right
of Alternate Conversion.
(i) General.
(1) Alternate
Optional Conversion. Subject to Section 3(d), at the option of the Holder, at any time on or after the Issuance Date, the Holder may
convert (each, an “Alternate Optional Conversion”, and the date of such Alternate Optional Conversion, an “Alternate
Optional Conversion Date”) all, or any part, of this Note into shares of Common Stock (such portion of the Conversion Amount
subject to such Alternate Optional Conversion, the “Alternate Optional Conversion Amount”) at the Alternate Conversion
Price.
(2) Alternate
Conversion Upon an Event of Default. Subject to Section 3(d), at any time after the occurrence of an Event of Default (regardless
of whether such Event of Default has been cured, or if the Company has delivered an Event of Default Notice to the Holder or if the Holder
has delivered an Event of Default Redemption Notice to the Company or otherwise notified the Company that an Event of Default has occurred),
the Holder may, at the Holder’s option, convert (each, an “Alternate Event of Default Conversion” and together
with each Alternate Optional Conversion, each, an “Alternate Conversion”, and the date of such Alternate Event of Default
Conversion, each, an “Alternate Event of Default Conversion Date”, and together with each Alternate Optional Conversion
Date, each, an “Alternate Conversion Date”) all, or any part of, the Conversion Amount (such portion of the Conversion
Amount subject to such Alternate Conversion, the “Alternate Event of Default Conversion Amount” and together with each
Alternate Optional Conversion Amount, each, an “Alternate Conversion Amount”) into shares of Common Stock at the Alternate
Conversion Price.
(ii) Mechanics
of Alternate Conversion. On any Alternate Conversion Date, the Holder may voluntarily convert any Alternate Conversion Amount pursuant
to Section 3(c) (with “Alternate Conversion Price” replacing “Conversion Price” for all purposes hereunder with
respect to such Alternate Conversion and, solely with respect to the calculation of the number of shares of Common Stock issuable upon
conversion of any Conversion Amount in an Alternate Event of Default Conversion, with “Event of Default Redemption Premium of the
Conversion Amount” replacing “Conversion Amount” in clause (x) of the definition of Conversion Rate above with respect
to such Alternate Conversion) by designating in the Conversion Notice delivered pursuant to this Section 3(e) of this Note that the Holder
is electing to use the Alternate Conversion Price for such conversion; provided that in the event of the Conversion Floor Price Condition,
on the applicable Alternate Conversion Date the Company shall also deliver to the Holder the applicable Alternate Conversion Floor Amount.
Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Company delivers shares of Common
Stock representing the applicable Alternate Conversion Amount to the Holder, such Alternate Conversion Amount may be converted by the
Holder into shares of Common Stock pursuant to Section 3(c) without regard to this Section 3(e).
10
4. RIGHTS
UPON EVENT OF DEFAULT.
(a) Event
of Default. Each of the following events shall constitute an “Event of Default” and each of the events in clauses
(ix), (x) and (xi) shall constitute a “Bankruptcy Event of Default”:
(i) the
failure of the applicable Registration Statement (as defined in the Registration Rights Agreement) to be filed with the SEC on or prior
to the date that is five (5) calendar days after the applicable Filing Deadline (as defined in the Registration Rights Agreement) or the
failure of the applicable Registration Statement to be declared effective by the SEC on or prior to the date that is five (5) calendar
days after the applicable Effectiveness Deadline (as defined in the Registration Rights Agreement);
(ii) while
the applicable Registration Statement is required to be maintained effective pursuant to the terms of the Registration Rights Agreement,
the effectiveness of the applicable Registration Statement lapses for any reason (including, without limitation, the issuance of a stop
order) or such Registration Statement (or the prospectus contained therein) is unavailable to any holder of Registrable Securities (as
defined in the Registration Rights Agreement) for sale of all of such holder’s Registrable Securities in accordance with the terms
of the Registration Rights Agreement, and such lapse or unavailability continues for a period of five (5) consecutive days or for more
than an aggregate of ten (10) calendar days in any 365-day period (excluding days during an Allowable Grace Period (as defined in the
Registration Rights Agreement));
(iii) the
suspension (or threatened suspension) from trading or the failure (or threatened failure) of the shares of Common Stock to be trading,
quoted or listed (as applicable) on an Eligible Market for a period of one (1) Trading Day, or the delisting or removal from quotation
of the shares of Common Stock from an Eligible Market;
(iv) the
Company’s (A) failure to cure a Conversion Failure by delivery of the required number of shares of Common Stock within five (5)
Trading Days after the applicable Conversion Date or (B) notice, written or oral, to any holder of the Notes, including, without limitation,
by way of public announcement or through any of its agents, at any time, of its intention not to comply, as required, with a request for
conversion of any Notes into shares of Common Stock that is requested in accordance with the provisions of the Notes, other than pursuant
to Section 3(d);
(v) except
to the extent the Company is in compliance with Section 12(b) below, at any time following the tenth (10th) consecutive day
that the Holder’s Authorized Share Allocation (as defined in Section 12(a) below) is less than the number of shares of Common Stock
that the Holder would be entitled to receive upon a conversion of the full Conversion Amount of this Note (without regard to any limitations
on conversion set forth in Section 3(d) or otherwise),;
11
(vi) the
Company’s or any Subsidiary’s failure to pay to the Holder any amount of Principal, Interest, Late Charges or other amounts
when and as due under this Note (including, without limitation, the Company’s or any Subsidiary’s failure to pay any redemption
payments or amounts hereunder) or any other Transaction Document (as defined in the Securities Purchase Agreement) or any other agreement,
document, certificate or other instrument delivered in connection with the transactions contemplated hereby and thereby, except, in the
case of a failure to pay Interest and Late Charges when and as due, in which case only if such failure remains uncured for a period of
at least two (2) Trading Days;
(vii) the
Company fails to remove any restrictive legend on any certificate or any shares of Common Stock issued to the Holder upon conversion or
exercise (as the case may be) of any Securities (as defined in the Securities Purchase Agreement) acquired by the Holder under the Securities
Purchase Agreement (including this Note) as and when required by such Securities or the Securities Purchase Agreement, unless otherwise
then prohibited by applicable federal securities laws, and any such failure remains uncured for at least five (5) days;
(viii) the
occurrence of any default under, redemption of or acceleration prior to maturity of at least an aggregate of $250,000 of Indebtedness
(as defined in the Securities Purchase Agreement) of the Company or any of its Subsidiaries, other than with respect to any Other Notes;
(ix) bankruptcy,
insolvency, reorganization or liquidation proceedings or other proceedings for the relief of debtors shall be instituted by or against
the Company or any Subsidiary and, if instituted against the Company or any Subsidiary by a third party, shall not be dismissed within
thirty (30) days of their initiation;
(x) the
commencement by the Company or any Subsidiary of a voluntary case or proceeding under any applicable federal, state or foreign bankruptcy,
insolvency, reorganization or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent, or the consent
by it to the entry of a decree, order, judgment or other similar document in respect of the Company or any Subsidiary in an involuntary
case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against it, or the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable federal, state or foreign law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official
of the Company or any Subsidiary or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors,
or the execution of a composition of debts, or the occurrence of any other similar federal, state or foreign proceeding, or the admission
by it in writing of its inability to pay its debts generally as they become due, the taking of corporate action by the Company or any
Subsidiary in furtherance of any such action or the taking of any action by any Person to commence a Uniform Commercial Code foreclosure
sale or any other similar action under federal, state or foreign law;
12
(xi) the
entry by a court of (i) a decree, order, judgment or other similar document in respect of the Company or any Subsidiary of a voluntary
or involuntary case or proceeding under any applicable federal, state or foreign bankruptcy, insolvency, reorganization or other similar
law or (ii) a decree, order, judgment or other similar document adjudging the Company or any Subsidiary as bankrupt or insolvent, or approving
as properly filed a petition seeking liquidation, reorganization, arrangement, adjustment or composition of or in respect of the Company
or any Subsidiary under any applicable federal, state or foreign law or (iii) a decree, order, judgment or other similar document appointing
a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or any Subsidiary or of any
substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree, order,
judgment or other similar document or any such other decree, order, judgment or other similar document unstayed and in effect for a period
of thirty (30) consecutive days;
(xii) a
final judgment or judgments for the payment of money aggregating in excess of $250,000 are rendered against the Company and/or any of
its Subsidiaries and which judgments are not, within thirty (30) days after the entry thereof, bonded, discharged, settled or stayed pending
appeal, or are not discharged within thirty (30) days after the expiration of such stay; provided, however, any judgment which is covered
by insurance or an indemnity from a credit worthy party shall not be included in calculating the $250,000 amount set forth above so long
as the Company provides the Holder a written statement from such insurer or indemnity provider (which written statement shall be reasonably
satisfactory to the Holder) to the effect that such judgment is covered by insurance or an indemnity and the Company or such Subsidiary
(as the case may be) will receive the proceeds of such insurance or indemnity within thirty (30) days of the issuance of such judgment;
(xiii) the
Company and/or any Subsidiary, individually or in the aggregate, either (i) fails to pay, when due, or within any applicable grace period,
any payment with respect to any Indebtedness in excess of $250,000 due to any third party (other than, with respect to unsecured Indebtedness
only, payments contested by the Company and/or such Subsidiary (as the case may be) in good faith by proper proceedings and with respect
to which adequate reserves have been set aside for the payment thereof in accordance with GAAP) or is otherwise in breach or violation
of any agreement for monies owed or owing in an amount in excess of $250,000, which breach or violation permits the other party thereto
to declare a default or otherwise accelerate amounts due thereunder, or (ii) suffer to exist any other circumstance or event that would,
with or without the passage of time or the giving of notice, result in a default or event of default under any agreement binding the Company
or any Subsidiary, which default or event of default would or is likely to have a material adverse effect on the business, assets, operations
(including results thereof), liabilities, properties, condition (including financial condition) or prospects of the Company or any of
its Subsidiaries, individually or in the aggregate;
13
(xiv) other
than as specifically set forth in another clause of this Section 4(a), the Company or any Subsidiary breaches any representation or warranty,
or any covenant or other term or condition of any Transaction Document, except, in the case of a breach of a covenant or other term or
condition that is curable, only if such breach remains uncured for a period of two (2) consecutive Trading Days;
(xv) a
false or inaccurate certification (including a false or inaccurate deemed certification) by the Company that either (A) the Equity Conditions
are satisfied, (B) there has been no Equity Conditions Failure, or (C) as to whether any Event of Default has occurred;
(xvi) any
breach or failure in any respect by the Company or any Subsidiary to comply with any provision of Section 15 of this Note;
(xvii) any
Material Adverse Effect (as defined in the Securities Purchase Agreement) occurs;
(xviii) any
provision of any Transaction Document (including, without limitation, the Security Documents and the Guaranties) shall at any time for
any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against the parties thereto,
or the validity or enforceability thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or
any Subsidiary or any governmental authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability
thereof, or the Company or any Subsidiary shall deny in writing that it has any liability or obligation purported to be created under
any Transaction Document (including, without limitation, the Security Documents and the Guaranties);
(xix) any
Security Document shall for any reason fail or cease to create a separate valid and perfected and, except to the extent permitted by the
terms hereof or thereof, first priority Lien (as defined in the Securities Purchase Agreement) on the Collateral (as defined in the Security
Documents) in favor of the Collateral Agent (as defined in the Securities Purchase Agreement) or any material provision of any Security
Document shall at any time for any reason cease to be valid and binding on or enforceable against the Company or the validity or enforceability
thereof shall be contested by any party thereto, or a proceeding shall be commenced by the Company or any governmental authority having
jurisdiction over the Company, seeking to establish the invalidity or unenforceability thereof;
(xx) any
material damage to, or loss, theft or destruction of, any Collateral, whether or not insured, or any strike, lockout, labor dispute, embargo,
condemnation, act of God or public enemy, or other casualty which causes, for more than fifteen (15) consecutive days, the cessation or
substantial curtailment of revenue producing activities at any facility of the Company or any Subsidiary, if any such event or circumstance
could have a Material Adverse Effect;
14
(xxi) the
Company fails to receive the Reverse Stock Split Authority by the Stock Split Authority Deadline or the Subsequent Stock Split Authority
by the Subsequent Stock Split Authority Deadline;
(xxii) the
Collateral Agent fails to have electronic access to the records of the Custodian with respect to the assets held by the Company and/or
any of its Subsidiaries, from time to time;
(xxiii) the
Company issues any instructions, directly or indirectly, to the Custodian in violation of any term or condition of any Note or any other
Transaction Documents;
(xxiv) any
Change of Control occurs, or the Company enters into any agreement to effect a Change of Control;
(xxv) a
Fundamental Transaction occurs, or the Company enters into any agreement to effect a Fundamental Transaction;
(xxvi) the
Company fails to engage the New Transfer Agent (as defined in the Securities Purchase Agreement) on or prior to the New Transfer Agent
Deadline (as defined in the Securities Purchase Agreement); or
(xxvii) any
Event of Default (as defined in the Other Notes) occurs with respect to any Other Notes.
(b) Notice
of an Event of Default; Redemption Right. Upon the occurrence of an Event of Default with respect to this Note or any Other Note,
the Company shall within one (1) Business Day deliver written notice thereof via electronic mail and overnight courier (with next day
delivery specified) (an “Event of Default Notice”) to the Holder. At any time after the earlier of the Holder’s
receipt of an Event of Default Notice and the Holder becoming aware of an Event of Default, the Holder may require the Company to redeem
(regardless of whether such Event of Default has been cured) all or any portion of this Note by delivering written notice thereof (the
“Event of Default Redemption Notice”) to the Company, which Event of Default Redemption Notice shall indicate the portion
of this Note the Holder is electing to redeem. Each portion of this Note subject to redemption by the Company pursuant to this Section
4(b) shall be redeemed by the Company at a price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied
by (B) the Event of Default Redemption Premium and (ii) the product of (X) the Conversion Rate with respect to the Conversion Amount in
effect at such time as the Holder delivers an Event of Default Redemption Notice multiplied by (Y) the product of (1) the Event of Default
Redemption Premium multiplied by (2) the greatest Closing Sale Price of the Common Stock on any Trading Day during the period commencing
on the date immediately preceding such Event of Default and ending on the date the Company makes the entire payment required to be made
under this Section 4(b) (the “Event of Default Redemption Price”). Redemptions required by this Section 4(b) shall
be made in accordance with the provisions of Section 13. To the extent redemptions required by this Section 4(b) are deemed or determined
by a court of competent jurisdiction
15
to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 3(e), but subject to Section 3(d), until the Event of Default Redemption Price
(together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 4(b) (together
with any Late Charges thereon) may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to the terms
of this Note. In the event of the Company’s redemption of any portion of this Note under this Section 4(b), the Holder’s damages
would be uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty
of the availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this
Section 4(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty. Any redemption upon an Event of Default shall not constitute an election of remedies by the Holder,
and all other rights and remedies of the Holder shall be preserved.
(c) Mandatory
Redemption upon Bankruptcy Event of Default. Notwithstanding anything to the contrary herein, and notwithstanding any conversion that
is then required or in process, upon any Bankruptcy Event of Default, whether occurring prior to or following the Maturity Date, the Company
shall immediately pay to the Holder an amount in cash representing (i) all outstanding Principal, accrued and unpaid Interest and accrued
and unpaid Late Charges on such Principal and Interest, multiplied by (ii) the Event of Default Redemption Premium, in addition to any
and all other amounts due hereunder, without the requirement for any notice or demand or other action by the Holder or any other person
or entity, provided that the Holder may, in its sole discretion, waive such right to receive payment upon a Bankruptcy Event of Default,
in whole or in part, and any such waiver shall not affect any other rights of the Holder hereunder, including any other rights in respect
of such Bankruptcy Event of Default, any right to conversion, and any right to payment of the Event of Default Redemption Price or any
other Redemption Price, as applicable.
5. RIGHTS
UPON FUNDAMENTAL TRANSACTION.
(a) Assumption.
The Company shall not enter into or be party to a Fundamental Transaction unless (i) the Successor Entity assumes in writing all
of the obligations of the Company under this Note and the other Transaction Documents in accordance with the provisions of this Section
5(a) pursuant to written agreements in form and substance satisfactory to the Holder and approved by the Holder prior to such Fundamental
Transaction, including agreements to deliver to each holder of Notes in exchange for such Notes a security of the Successor Entity evidenced
by a written instrument substantially similar in form and substance to the Notes, including, without limitation, having a principal amount
and interest rate equal to the principal amounts then outstanding and the interest rates of the Notes held by such holder, having similar
conversion rights as the Notes and having similar ranking and security to the Notes, and satisfactory to the Holder and (ii) the
Successor Entity (including its Parent Entity) is a publicly traded corporation whose common equity is quoted on or listed for trading
on an Eligible Market. Upon the occurrence of any Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for
(so that from and after the date of such Fundamental Transaction, the
16
provisions of this Note and the other Transaction Documents referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall
assume all of the obligations of the Company under this Note and the other Transaction Documents with the same effect as if such Successor
Entity had been named as the Company herein. Upon consummation of a Fundamental Transaction, the Successor Entity shall deliver to the
Holder confirmation that there shall be issued upon conversion or redemption of this Note at any time after the consummation of such Fundamental
Transaction, in lieu of the shares of Common Stock (or other securities, cash, assets or other property (except such items still issuable
under Sections 6 and 17, which shall continue to be receivable thereafter)) issuable upon the conversion or redemption of the Notes prior
to such Fundamental Transaction, such shares of the publicly traded common equity (or their equivalent) of the Successor Entity (including
its Parent Entity) which the Holder would have been entitled to receive upon the happening of such Fundamental Transaction had this Note
been converted immediately prior to such Fundamental Transaction (without regard to any limitations on the conversion of this Note), as
adjusted in accordance with the provisions of this Note. Notwithstanding the foregoing, the Holder may elect, at its sole option, by delivery
of written notice to the Company to waive this Section 5(a) to permit the Fundamental Transaction without the assumption of this Note.
The provisions of this Section 5 shall apply similarly and equally to successive Fundamental Transactions and shall be applied without
regard to any limitations on the conversion of this Note.
(b) Notice
of a Change of Control; Redemption Right. No sooner than twenty (20) Trading Days nor later than ten (10) Trading Days prior to the
consummation of a Change of Control (the “Change of Control Date”), but not prior to the public announcement of such
Change of Control, the Company shall deliver written notice thereof via electronic mail and overnight courier to the Holder (a “Change
of Control Notice”). At any time during the period beginning after the Holder’s receipt of a Change of Control Notice
or the Holder becoming aware of a Change of Control if a Change of Control Notice is not delivered to the Holder in accordance with the
immediately preceding sentence (as applicable) and ending on twenty (20) Trading Days after the latest of (A) the date of consummation
of such Change of Control or (B) the date of receipt of such Change of Control Notice or (C) the date of the announcement of such Change
of Control, the Holder may require the Company to redeem all or any portion of this Note by delivering written notice thereof (“Change
of Control Redemption Notice”) to the Company, which Change of Control Redemption Notice shall indicate the Conversion Amount
the Holder is electing to redeem. The portion of this Note subject to redemption pursuant to this Section 5 shall be redeemed by the Company
in cash at a price equal to the greatest of (i) the product of (w) the Change of Control Redemption Premium multiplied by (y) the Conversion
Amount being redeemed, (ii) the product of (x) the Change of Control Redemption Premium multiplied by (y) the product of (A) the Conversion
Amount being redeemed multiplied by (B) the quotient determined by dividing (I) the greatest Closing Sale Price of the Common Stock during
the period beginning on the date immediately preceding the earlier to occur of (1) the consummation of the applicable Change of Control
and (2) the public announcement of such Change of Control and ending on the date the Holder delivers the Change of Control Redemption
Notice by (II) the Conversion Price then in effect and (iii) the product of (y) the Change of Control Redemption Premium multiplied by
(z) the
17
product of (A) the Conversion Amount being redeemed multiplied by (B) the quotient of (I) the aggregate cash consideration and
the aggregate cash value of any non-cash consideration per share of Common Stock to be paid to the holders of the shares of Common Stock
upon consummation of such Change of Control (any such non-cash consideration constituting publicly-traded securities shall be valued at
the highest of the Closing Sale Price of such securities as of the Trading Day immediately prior to the consummation of such Change of
Control, the Closing Sale Price of such securities on the Trading Day immediately following the public announcement of such proposed Change
of Control and the Closing Sale Price of such securities on the Trading Day immediately prior to the public announcement of such proposed
Change of Control) divided by (II) the Conversion Price then in effect (the “Change of Control Redemption Price”).
Redemptions required by this Section 5 shall be made in accordance with the provisions of Section 13 and shall have priority to payments
to shareholders in connection with such Change of Control. To the extent redemptions required by this Section 5(b) are deemed or determined
by a court of competent jurisdiction to be prepayments of this Note by the Company, such redemptions shall be deemed to be voluntary prepayments.
Notwithstanding anything to the contrary in this Section 5, but subject to Section 3(d), until the Change of Control Redemption Price
(together with any Late Charges thereon) is paid in full, the Conversion Amount submitted for redemption under this Section 5(b) (together
with any Late Charges thereon) may be converted, in whole or in part, by the Holder into shares of Common Stock pursuant to Section 3.
In the event of the Company’s redemption of any portion of this Note under this Section 5(b), the Holder’s damages would be
uncertain and difficult to estimate because of the parties’ inability to predict future interest rates and the uncertainty of the
availability of a suitable substitute investment opportunity for the Holder. Accordingly, any redemption premium due under this Section
5(b) is intended by the parties to be, and shall be deemed, a reasonable estimate of the Holder’s actual loss of its investment
opportunity and not as a penalty.
6. RIGHTS
UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE EVENTS.
(a) Purchase
Rights. In addition to any adjustments pursuant to Section 7 and 17 below, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase shares, warrants, securities or other property pro rata to all or substantially
all of the record holders of any class of Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the
Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without taking into account any
limitations or restrictions on the convertibility of this Note and assuming for such purpose that the Note was converted at the Alternate
Conversion Price as of the applicable record date) immediately prior to the date on which a record is taken for the grant, issuance or
sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights (provided, however, that to the extent that the Holder’s
right to participate in any such Purchase Right would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such Purchase Right to
18
the extent of the Maximum Percentage (and shall not be
entitled to beneficial ownership of such shares of Common Stock as a result of such Purchase Right (and beneficial ownership) to the extent
of any such excess) and such Purchase Right to such extent shall be held in abeyance (and, if such Purchase Right has an expiration date,
maturity date or other similar provision, such term shall be extended by such number of days held in abeyance, if applicable) for the
benefit of the Holder until such time or times, if ever, as its right thereto would not result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted,
issued or sold on such initial Purchase Right or on any subsequent Purchase Right held similarly in abeyance (and, if such Purchase Right
has an expiration date, maturity date or other similar provision, such term shall be extended by such number of days held in abeyance,
if applicable)) to the same extent as if there had been no such limitation).
(b) Other
Corporate Events. In addition to and not in substitution for any other rights hereunder, prior to the consummation of any Fundamental
Transaction pursuant to which holders of Common Stock are entitled to receive securities or other assets with respect to or in exchange
for shares of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to ensure that the Holder
will thereafter have the right to receive upon a conversion of this Note, at the Holder’s option (i) in addition to the shares of
Common Stock receivable upon such conversion, such securities or other assets to which the Holder would have been entitled with respect
to such shares of Common Stock had such shares of Common Stock been held by the Holder upon the consummation of such Corporate Event (without
taking into account any limitations or restrictions on the convertibility of this Note) or (ii) in lieu of the shares of Common Stock
otherwise receivable upon such conversion, such securities or other assets received by the holders of Common Stock in connection with
the consummation of such Corporate Event in such amounts as the Holder would have been entitled to receive had this Note initially been
issued with conversion rights for the form of such consideration (as opposed to shares of Common Stock) at a conversion rate for such
consideration commensurate with the Conversion Rate. Provision made pursuant to the preceding sentence shall be in a form and substance
satisfactory to the Holder. The provisions of this Section 6 shall apply similarly and equally to successive Corporate Events and shall
be applied without regard to any limitations on the conversion or redemption of this Note.
7. RIGHTS
UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment
of Conversion Price upon Issuance of Common Stock. If and whenever on or after the Issuance Date the Company grants, issues or sells
(or enters into any agreement to grant, issue or sell), or in accordance with this Section 7(a) is deemed to have granted, issued or sold,
any shares of Common Stock (including the granting, issuance or sale of shares of Common Stock owned or held by or for the account of
the Company, but excluding any Excluded Securities granted, issued or sold or deemed to have been granted, issued or sold) for a consideration
per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to
such granting, issuance or sale or deemed granting, issuance or sale (such Conversion Price then in effect is referred to herein as the
“Applicable Price”) (the foregoing a “Dilutive Issuance”), then, immediately after such Dilutive
Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of the foregoing
(including, without limitation, determining the adjusted Conversion Price and the New Issuance Price under this Section 7(a)), the following
shall be applicable:
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(i) Issuance
of Options. If the Company in any manner grants, issues or sells (or enters into any agreement to grant, issue or sell) any Options
and the lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option or upon
conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the
terms thereof is less than the Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to have been issued
and sold by the Company at the time of the granting, issuance or sale of such Option for such price per share. For purposes of this Section
7(a)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the exercise of any such Option
or upon conversion, exercise or exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant
to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock upon the granting, issuance or sale of such Option, upon exercise
of such Option and upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of such Option or otherwise
pursuant to the terms thereof and (y) the lowest exercise price set forth in such Option for which one share of Common Stock is issuable
(or may become issuable assuming all possible market conditions) upon the exercise of any such Options or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such Option or otherwise pursuant to the terms thereof, minus (2)
the sum of all amounts paid or payable to the holder of such Option (or any other Person) with respect to any one share of Common Stock
upon the granting, issuance or sale of such Option, upon exercise of such Option and upon conversion, exercise or exchange of any Convertible
Security issuable upon exercise of such Option or otherwise pursuant to the terms thereof plus the value of any other consideration (including,
without limitation, consideration consisting of cash, debt forgiveness, assets or any other property) received or receivable by, or benefit
conferred on, the holder of such Option (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price
shall be made upon the actual issuance of such share of Common Stock or of such Convertible Securities upon the exercise of such Options
or otherwise pursuant to the terms thereof or upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange
of such Convertible Securities.
(ii) Issuance
of Convertible Securities. If the Company in any manner issues or sells (or enters into any agreement to issue or sell) any Convertible
Securities and the lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold
20
by the Company at the time of the issuance or sale (or the time of execution
of such agreement to issue or sell, as applicable) of such Convertible Securities for such price per share. For the purposes of this Section
7(a)(i), the “lowest price per share for which one share of Common Stock is at any time issuable upon the conversion, exercise or
exchange thereof or otherwise pursuant to the terms thereof” shall be equal to (1) the lower of (x) the sum of the lowest amounts
of consideration (if any) received or receivable by the Company with respect to one share of Common Stock upon the issuance or sale (or
pursuant to the agreement to issue or sell, as applicable) of the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security or otherwise pursuant to the terms thereof and (y) the lowest conversion price set forth in such Convertible Security
for which one share of Common Stock is issuable (or may become issuable assuming all possible market conditions) upon conversion, exercise
or exchange thereof or otherwise pursuant to the terms thereof minus (2) the sum of all amounts paid or payable to the holder of such
Convertible Security (or any other Person) with respect to any one share of Common Stock upon the issuance or sale (or the agreement to
issue or sell, as applicable) of such Convertible Security plus the value of any other consideration received or receivable (including,
without limitation, any consideration consisting of cash, debt forgiveness, assets or other property) by, or benefit conferred on, the
holder of such Convertible Security (or any other Person). Except as contemplated below, no further adjustment of the Conversion Price
shall be made upon the actual issuance of such shares of Common Stock upon conversion, exercise or exchange of such Convertible Securities
or otherwise pursuant to the terms thereof, and if any such issuance or sale of such Convertible Securities is made upon exercise of any
Options for which adjustment of the Conversion Price has been or is to be made pursuant to other provisions of this Section 7(a), except
as contemplated below, no further adjustment of the Conversion Price shall be made by reason of such issuance or sale.
(iii) Change
in Option Price or Rate of Conversion. If the purchase or exercise price provided for in any Options, the additional consideration,
if any, payable upon the issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which any Convertible Securities
are convertible into or exercisable or exchangeable for shares of Common Stock increases or decreases at any time (other than proportional
changes in conversion or exercise prices, as applicable, in connection with an event referred to in Section 7(b) below), the Conversion
Price in effect at the time of such increase or decrease shall be adjusted to the Conversion Price which would have been in effect at
such time had such Options or Convertible Securities provided for such increased or decreased purchase price, additional consideration
or increased or decreased conversion rate (as the case may be) at the time initially granted, issued or sold. For purposes of this Section
7(a)(iii), if the terms of any Option or Convertible Security (including, without limitation, any Option or Convertible Security that
was outstanding as of the Issuance Date) are increased or decreased in the manner described in the immediately preceding sentence, then
such Option or Convertible Security and the shares of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall
be deemed to have been issued as of the date of such increase or decrease. No adjustment pursuant to this Section 7(a) shall be made if
such adjustment would result in an increase of the Conversion Price then in effect.
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(iv) Calculation
of Consideration Received. If any Option and/or Convertible Security and/or Adjustment Right is issued in connection with the issuance
or sale or deemed issuance or sale of any other securities of the Company (as determined by the Holder, the “Primary Security”,
and such Option and/or Convertible Security and/or Adjustment Right, the “Secondary Securities” and together with the
Primary Security, each a “Unit”), together comprising one integrated transaction, the aggregate consideration per share
of Common Stock with respect to such Primary Security shall be deemed to be the lower of (x) the purchase price of such Unit, (y) if such
Primary Security is an Option and/or Convertible Security, the lowest price per share for which one share of Common Stock is at any time
issuable upon the exercise or conversion of the Primary Security in accordance with Section 7(a)(i) or 7(a)(ii) above and (z) the average
VWAP of the Common Stock on any Trading Day during the five (5) Trading Day period (the “Adjustment Period”) immediately
following the public announcement of such Dilutive Issuance (for the avoidance of doubt, if such public announcement is released prior
to the opening of the Principal Market on a Trading Day, such Trading Day shall be the first Trading Day in such five Trading Day period
and if this Note is converted, on any given Conversion Date during any such Adjustment Period, solely with respect to such portion of
this Note converted on such applicable Conversion Date, such applicable Adjustment Period shall be deemed to have ended on, and included,
the Trading Day immediately prior to such Conversion Date). If any shares of Common Stock, Options or Convertible Securities are issued
or sold or deemed to have been issued or sold for cash, the consideration received therefor will be deemed to be the net amount of consideration
received by the Company therefor. If any shares of Common Stock, Options or Convertible Securities are issued or sold for a consideration
other than cash, the amount of such consideration received by the Company will be the fair value of such consideration, except where such
consideration consists of publicly traded securities, in which case the amount of consideration received by the Company for such securities
will be the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days immediately preceding the date of receipt.
If any shares of Common Stock, Options or Convertible Securities are issued to the owners of the non-surviving entity in connection with
any merger in which the Company is the surviving entity, the amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is attributable to such shares of Common Stock, Options or Convertible
Securities (as the case may be). The fair value of any consideration other than cash or publicly traded securities will be determined
jointly by the Company and the Holder. If such parties are unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such consideration will be determined within five (5)
Trading Days after the tenth (10th) day following such Valuation Event by an independent, reputable appraiser jointly selected
by the Company and the Holder. The determination of such appraiser shall be final and binding upon all parties absent manifest error and
the fees and expenses of such appraiser shall be borne by the Company.
22
(v) Record
Date. If the Company takes a record of the holders of shares of Common Stock for the purpose of entitling them (A) to receive a dividend
or other distribution payable in shares of Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase shares
of Common Stock, Options or Convertible Securities, then such record date will be deemed to be the date of the issuance or sale of the
shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase (as the case may be).
(b) Adjustment
of Conversion Price upon Subdivision or Combination of Common Stock. Without limiting any provision of Section 6, Section 17
or Section 7(a), if the Company at any time on or after the Issuance Date subdivides (by any stock split, share dividend, share combination,
recapitalization or other similar transaction) one or more classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. Without limiting any provision
of Section 6, Section 17 or Section 7(a), if the Company at any time on or after the Issuance Date combines (by any stock split,
share dividend, share combination, recapitalization or other similar transaction) one or more classes of its outstanding shares of Common
Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination will be proportionately increased.
Any adjustment pursuant to this Section 7(b) shall become effective immediately after the effective date of such subdivision or combination.
If any event requiring an adjustment under this Section 7(b) occurs during the period that a Conversion Price is calculated hereunder,
then the calculation of such Conversion Price shall be adjusted appropriately to reflect such event.
(c) Holder’s
Right of Adjusted Conversion Price. In addition to and not in limitation of the other provisions of this Section 7, if the Company
in any manner issues or sells or enters into any agreement to issue or sell, any shares of Common Stock, Options or Convertible Securities
(any such securities, “Variable Price Securities”), after the Issuance Date that are issuable pursuant to such agreement
or convertible into or exchangeable or exercisable for shares of Common Stock at a price which varies or may vary with the market price
of the shares of Common Stock, including by way of one or more reset(s) to a fixed price, but exclusive of such formulations reflecting
customary anti-dilution provisions (such as stock splits, share combinations, share dividends and similar transactions) (each of the formulations
for such variable price being herein referred to as, the “Variable Price”), the Company shall provide written notice
thereof via electronic mail and overnight courier to the Holder on the date of such agreement and the issuance of such shares of Common
Stock, Convertible Securities or Options. From and after the date the Company enters into such agreement or issues any such Variable Price
Securities, the Holder shall have the right, but not the obligation, in its sole discretion to substitute the Variable Price for the Conversion
Price upon conversion of this Note by designating in the Conversion Notice delivered upon any conversion of this Note that solely for
purposes of such conversion the Holder is relying on the Variable Price rather than the Conversion Price then in effect. The Holder’s
election to rely on a Variable Price for a particular conversion of this Note shall not obligate the Holder to rely on a Variable Price
for any future conversion of this Note.
23
(d) Share
Combination Event Adjustments. If at any time and from time to time on or after the Issuance Date there occurs any stock split, share
dividend, share combination recapitalization or other similar transaction involving the shares of Common Stock (each, a “Share
Combination Event”, and such date thereof, the “Share Combination Event Date”) and the Event Market Price
is less than the Conversion Price then in effect (after giving effect to the adjustment in Section 7(b) above), then on the sixteenth
(16th) Trading Day immediately following such Share Combination Event Date, the Conversion Price then in effect on such sixteenth
(16th) Trading Day (after giving effect to the adjustment in Section 7(b) above) shall be reduced (but in no event increased)
to the Event Market Price. For the avoidance of doubt, if the adjustment in the immediately preceding sentence would otherwise result
in an increase in the Conversion Price hereunder, no adjustment shall be made.
(e) Other
Events. In the event that the Company (or any Subsidiary) shall take any action to which the provisions hereof are not strictly applicable,
or, if applicable, would not operate to protect the Holder from dilution or if any event occurs of the type contemplated by the provisions
of this Section 7 but not expressly provided for by such provisions (including, without limitation, the granting of share appreciation
rights, phantom share rights or other rights with equity features), then the Company’s board of directors shall in good faith determine
and implement an appropriate adjustment in the Conversion Price so as to protect the rights of the Holder, provided that no such adjustment
pursuant to this Section 7(e) will increase the Conversion Price as otherwise determined pursuant to this Section 7, provided further
that if the Holder does not accept such adjustments as appropriately protecting its interests hereunder against such dilution, then the
Company’s board of directors and the Holder shall agree, in good faith, upon an independent investment bank of nationally recognized
standing to make such appropriate adjustments, whose determination shall be final and binding absent manifest error and whose fees and
expenses shall be borne by the Company.
(f) Calculations.
All calculations under this Section 7 shall be made by rounding to the nearest cent or the nearest 1/100th of a share,
as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares shall be considered an issue or sale of shares of Common Stock.
(g) Voluntary
Adjustment by Company. Subject to the rules and regulations of the Principal Market, the Company may at any time during the term of
this Note, with the prior written consent of the Required Holders (as defined in the Securities Purchase Agreement), reduce the then current
Conversion Price of each of the Notes to any amount and for any period of time deemed appropriate by the board of directors of the Company.
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8. REDEMPTIONS
AT THE COMPANY’S ELECTION.
(a) Company
Optional Redemption. At any time the Company shall have the right to redeem all of the outstanding amount then remaining under this
Note (each, a “Company Optional Redemption Amount”) on the Company Optional Redemption Date (each as defined below)
(each, a “Company Optional Redemption”). The Note subject to redemption pursuant to this Section 8(a) shall be redeemed
by the Company in cash at a price (each, a “Company Optional Redemption Price”) equal to (i) 120% of the amount being
redeemed as of the Company Optional Redemption Date, if such Company Optional Redemption Date is on or prior to the twelve (12) month
anniversary of the Issuance Date, or (ii) 110% of the amount being redeemed as of the Company Optional Redemption Date, if such Company
Optional Redemption Date occurs after the twelve (12) month anniversary of the Issuance Date. The Company may exercise its right to require
redemption under this Section 8(a) by delivering a written notice thereof by electronic mail and overnight courier to all, but not less
than all, of the holders of Notes (the “Company Optional Redemption Notice” and the date all of the holders of Notes
received such notice is referred to as the “Company Optional Redemption Notice Date”). The Company may deliver only
one Company Optional Redemption Notice hereunder in any given twenty (20) Trading Day period and each Company Optional Redemption Notice
shall be irrevocable. The Company Optional Redemption Notice shall (x) state the date on which the Company Optional Redemption shall occur
(the “Company Optional Redemption Date”) which date shall not be less than thirty (30) Trading Days following the Company
Optional Redemption Notice Date, and (y) state the aggregate amount of the Notes which is being redeemed in such Company Optional Redemption
from the Holder and all of the other holders of the Notes pursuant to this Section 8(a) (and analogous provisions under the Other Notes)
on the Company Optional Redemption Date. All amounts converted by the Holder after the Company Optional Redemption Notice Date shall reduce
the Company Optional Redemption Amount of this Note required to be redeemed on the Company Optional Redemption Date. Redemptions made
pursuant to this Section 8(a) shall be made in accordance with Section 13. In the event of the Company’s redemption of any portion
of this Note under this Section 8(a), the Holder’s damages would be uncertain and difficult to estimate because of the parties’
inability to predict future interest rates and the uncertainty of the availability of a suitable substitute investment opportunity for
the Holder. Accordingly, any redemption premium due under this Section 8(a) is intended by the parties to be, and shall be deemed, a reasonable
estimate of the Holder’s actual loss of its investment opportunity and not as a penalty. For the avoidance of doubt, the Company
shall have no right to effect a Company Optional Redemption if any Event of Default has occurred and continuing, but any Event of Default
shall have no effect upon the Holder’s right to convert this Note in its discretion.
(b) Pro
Rata Redemption Requirement. If the Company elects to cause a Company Optional Redemption of this Note pursuant to Section 8(a) above,
then it must simultaneously take the same action with respect to all of the outstanding Other Notes.
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9. SUBSEQUENT
PLACEMENT OPTIONAL REDEMPTION
(a) General.
At any time from and after (i) the date the Holder becomes aware of the occurrence of a Subsequent Placement (as defined in the Securities
Purchase Agreement) (the “Holder Notice Date”), and (ii) the time of consummation of a Subsequent Placement (in each
case, other than with respect to Excluded Securities (as defined in the Securities Purchase Agreement)) (each, an “Eligible Subsequent
Placement”), the Holder shall have the right, in its sole discretion, to require that the Company redeem (each a “Subsequent
Placement Optional Redemption”) all, or any portion, of the Conversion Amount under this Note not in excess of (together with
any Subsequent Placement Optional Redemption Amount (as defined in the applicable other Note of the Holder) of any other Notes of the
Holder) the Holder’s Holder Pro Rata Amount of 20% of the gross proceeds of such Eligible Subsequent Placement (the “Eligible
Subsequent Placement Optional Redemption Amount”) by delivering written notice thereof (an “Subsequent Placement Optional
Redemption Notice”) to the Company. Notwithstanding the foregoing, if the Holder is participating in an Eligible Subsequent
Placement, upon the written request of the Holder, the Company shall apply all, or any part, as set forth in such written request, of
any amounts that would otherwise be payable to the Holder in such Subsequent Placement Optional Redemption, on a dollar-for-dollar basis,
against the purchase price of the securities to be purchased by the Holder in such Eligible Subsequent Placement.
(b) Mechanics.
Each Subsequent Placement Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth in the applicable
Subsequent Placement Optional Redemption Notice, of the Eligible Subsequent Placement Optional Redemption Amount the Holder is electing
to have redeemed (the “Subsequent Placement Optional Redemption Amount”) and the date of such Subsequent Placement
Optional Redemption (the “Subsequent Placement Optional Redemption Date”), which shall be the later of (x) the fifth
(5th) Business Day after the date of the applicable Subsequent Placement Optional Redemption Notice and (y) the date of the
consummation of such Eligible Subsequent Placement. The portion of the Conversion Amount of this Note subject to redemption pursuant to
this Section 9 shall be redeemed by the Company in cash at a price equal to 120% of the Subsequent Placement Optional Redemption Amount
(the “Subsequent Placement Optional Redemption Price”). Redemptions required by this Section 10 shall be made in accordance
with the provisions of Section 13.
10. ASSET
SALE OPTIONAL REDEMPTION
(a) General.
At any time from and after the earlier of (x) the date the Holder becomes aware of the occurrence of an Asset Sale (including any insurance
and condemnation proceeds thereof) (the “Holder Notice Date”) and (y) the time of consummation of an Asset Sale (other
than sales of inventory and product in the ordinary course of business or Permitted Sales) (each, an “Eligible Asset Sale”),
the Holder shall have the right, in its sole discretion, to require that the Company redeem (each an “Asset Sale Optional Redemption”)
all, or any portion, of the Conversion Amount under this Note not in excess of (together with any Asset Sale Optional Redemption Amount
(as defined in the applicable other Note of the Holder) of any other Notes of the Holder) the Holder’s Holder Pro Rata Amount of
20% of the gross proceeds (including any insurance and condemnation proceeds with respect thereto) of such Eligible Asset Sale (the “Eligible
Asset Sale Optional Redemption Amount”) by delivering written notice thereof (an “Asset Sale Optional Redemption Notice”)
to the Company.
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(b) Mechanics.
Each Asset Sale Optional Redemption Notice shall indicate that all, or such applicable portion, as set forth in the applicable Asset Sale
Optional Redemption Notice, of the Eligible Asset Sale Optional Redemption Amount the Holder is electing to have redeemed (the “Asset
Sale Optional Redemption Amount”) and the date of such Asset Sale Optional Redemption (the “Asset Sale Optional Redemption
Date”), which shall be the later of (x) the fifth (5th) Business Day after the date of the applicable Asset Sale
Optional Redemption Notice and (y) the date of the consummation of such Eligible Asset Sale. The portion of the Conversion Amount of this
Note subject to redemption pursuant to this Section 10 shall be redeemed by the Company in cash at a price equal to 120% of the Asset
Sale Optional Redemption Amount being redeemed as of the Asset Sale Optional Redemption Date (the “Asset Sale Optional Redemption
Price”). Redemptions required by this Section 10 shall be made in accordance with the provisions of Section 13.
11. NONCIRCUMVENTION.
The Company hereby covenants and agrees that the Company will not, by amendment of its Articles of Incorporation (as defined in the Securities
Purchase Agreement), or through any reorganization, transfer of assets, consolidation, merger, scheme of arrangement, dissolution, issue
or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this
Note, and will at all times in good faith carry out all of the provisions of this Note and take all action as may be required to protect
the rights of the Holder of this Note. Without limiting the generality of the foregoing or any other provision of this Note or the other
Transaction Documents, the Company (a) shall not increase the par value of any shares of Common Stock receivable upon conversion
of this Note above the Conversion Price then in effect, and (b) shall take all such actions as may be necessary or appropriate in
order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the conversion of this Note.
Notwithstanding anything herein to the contrary, if after the six (6) month anniversary of the Issuance Date, the Holder is not permitted
to convert this Note in full for any reason (other than pursuant to restrictions set forth in Section 3(d) hereof), the Company shall
use its best efforts to promptly remedy such failure, including, without limitation, obtaining such consents or approvals as necessary
to permit such conversion into shares of Common Stock.
12. RESERVATION
OF AUTHORIZED SHARES.
(a) Reservation.
So long thereafter as any Notes remain outstanding, the Company shall reserve at least the number of shares of Common Stock as shall from
time to time be necessary to effect the conversion, including without limitation, Alternate Conversions, of all of the Notes then outstanding
(without regard to any limitations on conversions and assuming such Notes remain outstanding until the Maturity Date) at the Floor Price
then in effect (the “Required Reserve Amount”). The Required Reserve Amount (including, without limitation, each increase
in the number of shares so reserved) shall be allocated pro rata among the holders of the Notes based on the original principal
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amount
of the Notes held by each holder on the Closing Date or increase in the number of reserved shares, as the case may be (the “Authorized
Share Allocation”). In the event that a holder shall sell or otherwise transfer any of such holder’s Notes, each transferee
shall be allocated a pro rata portion of such holder’s Authorized Share Allocation. Any shares of Common Stock reserved and allocated
to any Person which ceases to hold any Notes shall be allocated to the remaining holders of Notes, pro rata based on the principal amount
of the Notes then held by such holders.
(b) Insufficient
Authorized Shares. If, notwithstanding Section 12(a), and not in limitation thereof, at any time while any of the Notes remain outstanding
the Company does not have a sufficient number of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve
for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized
Share Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares
of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes then outstanding. Without
limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than seventy-five (75) days after the occurrence of such Authorized Share Failure, the Company shall hold a meeting
of its shareholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each shareholder with a proxy statement and shall use its best efforts to solicit its shareholders’ approval
of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the shareholders that they approve
such proposal. In the event that the Company is prohibited from issuing shares of Common Stock pursuant to the terms of this Note due
to the failure by the Company to have sufficient shares of Common Stock available out of the authorized but unissued shares of Common
Stock (such unavailable number of shares of Common Stock, the “Authorized Failure Shares”), in lieu of delivering such
Authorized Failure Shares to the Holder, the Company shall pay cash in exchange for the redemption of such portion of the Conversion Amount
convertible into such Authorized Failure Shares at a price equal to the sum of (i) the product of (x) such number of Authorized Failure
Shares and (y) the greatest Closing Sale Price of the shares of Common Stock on any Trading Day during the period commencing on the date
the Holder delivers the applicable Conversion Notice with respect to such Authorized Failure Shares to the Company and ending on the date
of such issuance and payment under this Section 12(a); and (ii) to the extent the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of Authorized Failure Shares, any brokerage commissions and
other out-of-pocket expenses, if any, of the Holder incurred in connection therewith. Nothing contained in Section 12(a) or this Section
12(b) shall limit any obligations of the Company under any provision of the Securities Purchase Agreement.
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13. REDEMPTIONS.
(a) Mechanics.
The Company shall deliver the applicable Event of Default Redemption Price to the Holder in cash within five (5) Business Days after the
Company’s receipt of the Holder’s Event of Default Redemption Notice. If the Holder has submitted a Change of Control Redemption
Notice in accordance with Section 5(b), the Company shall deliver the applicable Change of Control Redemption Price to the Holder in cash
concurrently with the consummation of such Change of Control if such notice is received prior to the consummation of such Change of Control
and within five (5) Business Days after the Company’s receipt of such notice otherwise. The Company shall deliver the applicable
Company Optional Redemption Price to the Holder in cash on the applicable Company Optional Redemption Date. The Company shall deliver
the applicable Asset Sale Optional Redemption Price to the Holder in cash on the applicable Asset Sale Optional Redemption Date. The Company
shall deliver the applicable Subsequent Placement Optional Redemption Price to the Holder in cash on the applicable Subsequent Placement
Optional Redemption Date. Notwithstanding anything herein to the contrary, in connection with any redemption hereunder at a time the Holder
is entitled to receive a cash payment under any of the other Transaction Documents, at the option of the Holder delivered in writing to
the Company, the applicable Redemption Price hereunder shall be increased by the amount of such cash payment owed to the Holder under
such other Transaction Document and, upon payment in full or conversion in accordance herewith, shall satisfy the Company’s payment
obligation under such other Transaction Document. In the event of a redemption of less than all of the Conversion Amount of this Note,
the Company shall promptly cause to be issued and delivered to the Holder a new Note (in accordance with Section 20(d)) representing the
outstanding Principal which has not been redeemed. In the event that the Company does not pay the applicable Redemption Price to the Holder
within the time period required, at any time thereafter and until the Company pays such unpaid Redemption Price in full, the Holder shall
have the option, in lieu of redemption, to require the Company to promptly return to the Holder all or any portion of this Note representing
the Conversion Amount that was submitted for redemption and for which the applicable Redemption Price (together with any Late Charges
thereon) has not been paid. Upon the Company’s receipt of such notice, (x) the applicable Redemption Notice shall be null and void
with respect to such Conversion Amount, (y) the Company shall immediately return this Note, or issue a new Note (in accordance with Section
20(d)), to the Holder, and in each case the Principal of this Note or such new Note (as the case may be) shall be increased by an
amount equal to the difference between (1) the applicable Redemption Price (as the case may be, and as adjusted pursuant to this Section
13, if applicable) minus (2) the Principal portion of the Conversion Amount submitted for redemption and (z) the Conversion Price of this
Note or such new Notes (as the case may be) shall be automatically adjusted with respect to each conversion effected thereafter by the
Holder to the lowest of (A) the Conversion Price as in effect on the date on which the applicable Redemption Notice is voided, (B) the
greater of (x) the Floor Price and (y) 75% of the lowest Closing Bid Price of the Common Stock during the period beginning on and including
the date on which the applicable Redemption Notice is delivered to the Company and ending on and including the date on which the applicable
Redemption Notice is voided and (C) the greater of (x) the Floor Price and (y) 75% of the quotient of (I) the sum of the five (5) lowest
VWAPs of the Common Stock during the twenty (20) consecutive Trading Day period ending and including the applicable Conversion Date divided
by (II) five (5) (it being understood and agreed that all such determinations shall be appropriately adjusted for any share dividend,
stock split, share combination or other similar transaction during such period). The Holder’s delivery of a notice voiding a Redemption
Notice and exercise of its rights following such notice shall not affect the Company’s obligations to make any payments of Late
Charges which have accrued prior to the date of such notice with respect to the Conversion Amount subject to such notice.
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(b) Redemption
by Other Holders. Upon the Company’s receipt of notice from any of the holders of the Other Notes for redemption or repayment
as a result of an event or occurrence substantially similar to the events or occurrences described in Section 4(b) or Section 5(b) (each,
an “Other Redemption Notice”), the Company shall immediately, but no later than one (1) Business Day of its receipt
thereof, forward to the Holder by electronic mail a copy of such notice. If the Company receives a Redemption Notice and one or more Other
Redemption Notices, during the seven (7) Business Day period beginning on and including the date which is two (2) Business Days prior
to the Company’s receipt of the Holder’s applicable Redemption Notice and ending on and including the date which is two (2)
Business Days after the Company’s receipt of the Holder’s applicable Redemption Notice and the Company is unable to redeem
all principal, interest and other amounts designated in such Redemption Notice and such Other Redemption Notices received during such
seven (7) Business Day period, then the Company shall redeem a pro rata amount from each holder of the Notes (including the Holder) based
on the principal amount of the Notes submitted for redemption pursuant to such Redemption Notice and such Other Redemption Notices received
by the Company during such seven (7) Business Day period.
14. VOTING
RIGHTS. The Holder shall have no voting rights as the holder of this Note, except as required by law and as expressly provided in
this Note.
15. COVENANTS.
Until all of the Notes (including the Other Notes that may be issued pursuant to the Securities Purchase Agreement from time to time)
have been converted, redeemed or otherwise satisfied in accordance with their terms:
(a) Rank.
All payments due under this Note (a) shall rank pari passu with all Other Notes and (b) shall be senior to all other Indebtedness
of the Company and its Subsidiaries (other than Permitted Equipment Indebtedness solely with respect to the Permitted Lien with respect
thereto).
(b) Incurrence
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, incur
or guarantee, assume or suffer to exist any Indebtedness (other than (i) the Indebtedness evidenced by this Note and the Other Notes and
(ii) any other Permitted Indebtedness).
(c) Existence
of Liens. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, allow or suffer
to exist any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts
and contract rights) owned by the Company or any of its Subsidiaries (collectively, “Liens”) other than Permitted Liens.
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(d) Restricted
Payments and Investments. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the payment of cash or cash equivalents (in whole or in part,
whether by way of open market purchases, tender offers, private transactions or otherwise), all or any portion of any Indebtedness (other
than the Notes and the Other Notes) whether by way of payment in respect of principal of (or premium, if any) or interest on, such Indebtedness
or make any Investment, as applicable, if at the time such payment with respect to such Indebtedness and/or Investment, as applicable,
is due or is otherwise made or, after giving effect to such payment, (i) an event constituting an Event of Default has occurred and is
continuing or (ii) an event that with the passage of time and without being cured would constitute an Event of Default has occurred and
is continuing.
(e) Restriction
on Redemption and Cash Dividends. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or
indirectly, redeem, repurchase or declare or pay any cash dividend or distribution on any of its capital stock.
(f) Restriction
on Transfer of Assets. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly,
sell, lease, license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any assets or rights of the Company
or any Subsidiary owned or hereafter acquired whether in a single transaction or a series of related transactions, other than (i) sales,
leases, licenses, assignments, transfers, conveyances and other dispositions of such assets or rights by the Company and its Subsidiaries
in the ordinary course of business consistent with its past practice and (ii) sales of inventory and product (including but not limited
to any form of cryptocurrency produced by the Company and its Subsidiaries) in the ordinary course of business.
(g) Maturity
of Indebtedness. The Company shall not, and the Company shall cause each of its Subsidiaries to not, directly or indirectly, permit
any Indebtedness of the Company or any of its Subsidiaries to mature or accelerate prior to the Maturity Date.
(h) Rules
of Principal Market. The Company shall maintain compliance with the continued listing requirements of the Principal Market, including
the stockholders’ equity requirement pursuant to Nasdaq Listing Rule 5550(b)(1).
(i) Preservation
of Existence, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, its existence,
rights and privileges, and become or remain, and cause each of its Subsidiaries to become or remain, duly qualified and in good standing
in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes
such qualification necessary.
(j) Maintenance
of Properties, Etc. The Company shall maintain and preserve, and cause each of its Subsidiaries to maintain and preserve, all of its
properties which are necessary or useful in the proper conduct of its business in good working order and condition, ordinary wear and
tear excepted, and comply, and cause each of its Subsidiaries to comply, at all times with the provisions of all leases to which it is
a party as lessee or under which it occupies property, so as to prevent any loss or forfeiture thereof or thereunder.
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(k) Maintenance
of Intellectual Property. The Company will, and will cause each of its Subsidiaries to, take all action necessary or advisable to
maintain all of the Intellectual Property Rights (as defined in the Securities Purchase Agreement) of the Company and/or any of its Subsidiaries
that are necessary or material to the conduct of its business in full force and effect.
(l) Maintenance
of Insurance. The Company shall maintain, and cause each of its Subsidiaries to maintain director and officer’s insurance with
responsible and reputable insurance companies or associations in at least an aggregate amount of $5.0 million. The Company shall maintain,
and cause each of its Subsidiaries to maintain, insurance with responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, hazard, rent and business interruption insurance) with respect to its properties
(including all real properties leased or owned by it) and business, in such amounts and covering such risks as is required by any governmental
authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies
in similar businesses similarly situated.
(m) Transactions
with Affiliates. The Company shall not, nor shall it permit any of its Subsidiaries to, enter into, renew, extend or be a party to,
any transaction or series of related transactions (including, without limitation, the purchase, sale, lease, transfer or exchange of property
or assets of any kind or the rendering of services of any kind) with any affiliate, except transactions in the ordinary course of business
in a manner and to an extent consistent with past practice and necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to it or its Subsidiaries than would be obtainable in a comparable arm’s length transaction
with a Person that is not an affiliate thereof, including but not limited to, clause (iv) of the definition of the Permitted Indebtedness.
(n) Restricted
Issuances. The Company shall not, directly or indirectly, without the prior written consent of the holders of a majority in aggregate
principal amount of the Notes then outstanding, (i) issue any promissory notes (other than as contemplated by this Note, the Securities
Purchase Agreement and the Other Notes) or (ii) issue any other securities that would cause a breach or default under this Notes or the
Other Notes.
(o) New
Subsidiaries. Simultaneously with the acquisition or formation of each New Subsidiary, the Company shall cause such New Subsidiary
to execute, and deliver to each holder of Notes, all Security Documents (as defined in the Securities Purchase Agreement) and Guaranties
(as defined in the Securities Purchase Agreement) as requested by the Collateral Agent or the Required Holders, as applicable. The Company
shall also deliver to the Collateral Agent an opinion of counsel to such New Subsidiary that is reasonably satisfactory to the Collateral
Agent and the Required Holders covering such legal matters with respect to such New Subsidiary becoming a guarantor of the Company’s
obligations, executing and delivering the Security Document and the Guaranties and any other matters that the Collateral Agent or the
Required Holders may reasonably request. The Company shall deliver, or cause the applicable Subsidiary to deliver to the Collateral Agent,
each of the physical share certificates of such New Subsidiary, along with undated
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share powers for each such certificates, executed in
blank (or, if any such shares of share capital are uncertificated, confirmation and evidence reasonably satisfactory to the Collateral
Agent and the Required Holders that the security interest in such uncertificated securities has been transferred to and perfected by the
Collateral Agent, in accordance with Sections 8-313, 8-321 and 9-115 of the Uniform Commercial Code or any other similar or local or foreign
law that may be applicable).
(p) Change
in Collateral; Collateral Records. The Company shall (i) give the Collateral Agent not less than thirty (30) days’ prior written
notice of any change in the location of any Collateral (as defined in the Security Documents), other than to locations set forth in the
Perfection Certificate (as defined in the Securities Purchase Agreement) hereto and with respect to which the Collateral Agent has filed
financing statements and otherwise fully perfected its Liens thereon, (ii) advise the Collateral Agent promptly, in sufficient detail,
of any material adverse change relating to the type, quantity or quality of the Collateral or the Lien granted thereon and (iii) execute
and deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent for the benefit of the Holder and holders
of the Other Notes from time to time, solely for the Collateral Agent’s convenience in maintaining a record of Collateral, such
written statements and schedules as the Collateral Agent or any Holder may reasonably require, designating, identifying or describing
the Collateral.
(q) Stay,
Extension and Usury Laws. To the extent that it may lawfully do so, the Company (A) agrees that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law (wherever or whenever enacted
or in force) that may affect the covenants or the performance of this Note; and (B) expressly waives all benefits or advantages of any
such law and agrees that it will not, by resort to any such law, hinder, delay or impede the execution of any power granted to the Holder
by this Note, but will suffer and permit the execution of every such power as though no such law has been enacted.
(r) Taxes.
The Company and its Subsidiaries shall pay when due all taxes, fees or other charges of any nature whatsoever (together with any related
interest or penalties) now or hereafter imposed or assessed against the Company and its Subsidiaries or their respective assets or upon
their ownership, possession, use, operation or disposition thereof or upon their rents, receipts or earnings arising therefrom (except
where the failure to pay would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries
). The Company and its Subsidiaries shall file on or before the due date therefor all personal property tax returns (except where the
failure to file would not, individually or in the aggregate, have a material effect on the Company or any of its Subsidiaries). Notwithstanding
the foregoing, the Company and its Subsidiaries may contest, in good faith and by appropriate proceedings, taxes for which they maintain
adequate reserves therefor in accordance with GAAP.
(s) Available
Cash Test. Commencing on July 17, 2026, and at any time thereafter that any Notes remain outstanding, the Company’s Available
Cash and cash equivalents produced by the Company and its Subsidiaries, as of the last calendar day in each Fiscal Quarter (each, a “Covenant
Measuring Date”) shall equal or exceed $750,000 (the “Available Cash Test”).
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(t) Independent
Investigation. At the request of the Holder either (x) at any time when an Event of Default has occurred and is continuing, (y) upon
the occurrence of an event that with the passage of time or giving of notice would constitute an Event of Default or (z) at any time the
Holder reasonably believes an Event of Default may have occurred or be continuing, the Company shall hire an independent, reputable investment
bank selected by the Company and approved by the Holder to investigate as to whether any breach of this Note has occurred (the “Independent
Investigator”). If the Independent Investigator determines that such breach of this Note has occurred, the Independent Investigator
shall notify the Company of such breach and the Company shall deliver written notice to each holder of a Note of such breach. In connection
with such investigation, the Independent Investigator may, during normal business hours, inspect all contracts, books, records, personnel,
offices and other facilities and properties of the Company and its Subsidiaries and, to the extent available to the Company after the
Company uses reasonable efforts to obtain them, the records of its legal advisors and accountants (including the accountants’ work
papers) and any books of account, records, reports and other papers not contractually required of the Company to be confidential or secret,
or subject to attorney-client or other evidentiary privilege, and the Independent Investigator may make such copies and inspections thereof
as the Independent Investigator may reasonably request. The Company shall furnish the Independent Investigator with such financial and
operating data and other information with respect to the business and properties of the Company as the Independent Investigator may reasonably
request. The Company shall permit the Independent Investigator to discuss the affairs, finances and accounts of the Company with, and
to make proposals and furnish advice with respect thereto to, the Company’s officers, directors, key employees and independent public
accountants or any of them (and by this provision the Company authorizes said accountants to discuss with such Independent Investigator
the finances and affairs of the Company and any Subsidiaries), all at such reasonable times, upon reasonable notice, and as often as may
be reasonably requested. If a breach of this Note or any other Transaction Documents exists (or the Independent Investigator reasonably
determines that the Holder has a reasonable basis to believe a breach of this Note or any other Transaction Documents existed), the Company
shall be responsible for the reasonable fees and expenses of such Independent Investigator. If a breach of this Note or any other Transaction
Documents does not exist and the Independent Investigator reasonably determines that the Holder did not have reasonable basis to believe
a breach of this Note or any other Transaction Documents existed, the Holder shall be responsible for the reasonable fees and expenses
of such Independent Investigator.
(u) Reverse
Stock Split.
(i) Current
Stock Split Authority. Within sixty (60) days from the Subscription Date (the “Stock Split Authority Deadline”),
the Company will obtain Reverse Stock Split Authority (as defined in the Securities Purchase Agreement).
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(ii) Subsequent
Stock Split Authority. If, at any time within three (3) months following a reverse stock split pursuant to the Reverse Stock Split
Authority, the Company has the ability to effect an additional reverse stock split of the Common Stock at a ratio of less than 10-for-1
(each, a “Subsequent Stock Split Authority”), then, so long as any Notes remain outstanding, the board of directors
of the Company shall obtain authority from the stockholders of the Company to effect one or more additional reverse stock splits at a
ratio within the range from 5-for-1 up to 250-for-1 (each, a “Subsequent Stock Split Authority”) within forty five
(45) days after the date on which the Company is able to effect another reverse stock split (the “Subsequent Stock Split Authority
Deadline”).
16. SECURITY.
This Note and the Other Notes are secured to the extent and in the manner set forth in the Transaction Documents (including, without limitation,
the Security Agreement, the other Security Documents and the Guaranties).
17. DISTRIBUTION
OF ASSETS. For so long as this Note or any Other Notes remain outstanding, the Company shall not declare or make any Distribution
(as defined below), without the prior written consent of the Required Holders.
In addition to any adjustments pursuant to Sections 6 and 7, if the Company shall declare or make any dividend or other distributions
of its assets (or rights to acquire its assets) to any or all holders of shares of Common Stock, by way of return of capital or otherwise
(including without limitation, any distribution of cash, shares or other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (the “Distributions”),
then the Holder will be entitled to such Distributions as if the Holder had held the number of shares of Common Stock acquirable upon
complete conversion of this Note (without taking into account any limitations or restrictions on the convertibility of this Note and assuming
for such purpose that the Note was converted at the Alternate Conversion Price as of the applicable record date) immediately prior to
the date on which a record is taken for such Distribution or, if no such record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for such Distributions (provided, however, that to the extent that the Holder’s right to participate
in any such Distribution would result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, then the Holder
shall not be entitled to participate in such Distribution to the extent of the Maximum Percentage (and shall not be entitled to beneficial
ownership of such shares of Common Stock as a result of such Distribution (and beneficial ownership) to the extent of any such excess)
and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time or times, if ever, as its
right thereto would not result in the Holder and the other Attribution Parties exceeding the Maximum Percentage, at which time or times
the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent
Distribution held similarly in abeyance) to the same extent as if there had been no such limitation).
18. AMENDING
THE TERMS OF THIS NOTE. Except for Section 3(d) and this Section 18, which may not be amended, modified or waived by the parties hereto,
the prior written consent of the Required Holders shall be required for any change, waiver or amendment to this Note.
19. TRANSFER.
This Note and any shares of Common Stock issued upon conversion of this Note may be offered, sold, assigned or transferred by the Holder
without the consent of the Company, subject only to the provisions of Section 2(g) of the Securities Purchase Agreement.
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20. REISSUANCE
OF THIS NOTE.
(a) Transfer.
If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will forthwith issue and
deliver upon the order of the Holder a new Note (in accordance with Section 20(d)), registered as the Holder may request, representing
the outstanding Principal being transferred by the Holder and, if less than the entire outstanding Principal is being transferred, a new
Note (in accordance with Section 20(d)) to the Holder representing the outstanding Principal not being transferred. The Holder and any
assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Section 3(c)(iii) following conversion
or redemption of any portion of this Note, the outstanding Principal represented by this Note may be less than the Principal stated on
the face of this Note.
(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction
or mutilation of this Note (as to which a written certification and the indemnification contemplated below shall suffice as such evidence),
and, in the case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company in customary and reasonable
form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company shall execute and deliver to the Holder
a new Note (in accordance with Section 20(d)) representing the outstanding Principal.
(c) Note
Exchangeable for Different Denominations. This Note is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Note or Notes (in accordance with Section 20(d) and in principal amounts of at least $1,000) representing in
the aggregate the outstanding Principal of this Note, and each such new Note will represent such portion of such outstanding Principal
as is designated by the Holder at the time of such surrender.
(d) Issuance
of New Notes. Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be
of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the Principal remaining outstanding (or
in the case of a new Note being issued pursuant to Section 20(a) or Section 20(c), the Principal designated by the Holder which, when
added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face
of such new Note, which is the same as the Issuance Date of this Note, (iv) shall have the same rights and conditions as this Note, and
(v) shall represent accrued and unpaid Interest and Late Charges on the Principal and Interest of this Note, from the Issuance Date.
21. REMEDIES,
CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note and any of the other Transaction Documents at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s right to pursue actual and
consequential damages for any failure by the Company to comply with the terms of this Note. No failure on the part of the
36
Holder to exercise,
and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise
by the Holder of any right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or
remedy. In addition, the exercise of any right or remedy of the Holder at law or equity or under this Note or any of the documents shall
not be deemed to be an election of Holder’s rights or remedies under such documents or at law or equity. The Company covenants to
the Holder that there shall be no characterization concerning this instrument other than as expressly provided herein. Amounts set forth
or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received
by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that
the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened
breach, the Holder shall be entitled, in addition to all other available remedies, to specific performance and/or temporary, preliminary
and permanent injunctive or other equitable relief from any court of competent jurisdiction in any such case without the necessity of
proving actual damages and without posting a bond or other security. The Company shall provide all information and documentation to the
Holder that is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of
this Note (including, without limitation, compliance with Section 7).
22. PAYMENT
OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding or the Holder otherwise takes action to collect amounts due under this Note or to
enforce the provisions of this Note or (b) there occurs any bankruptcy, reorganization, receivership of the Company or other proceedings
affecting Company creditors’ rights and involving a claim under this Note, then the Company shall pay the costs incurred by the
Holder for such collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or other proceeding,
including, without limitation, attorneys’ fees and disbursements. The Company expressly acknowledges and agrees that no amounts
due under this Note shall be affected, or limited, by the fact that the purchase price paid for this Note was less than the original Principal
amount hereof.
23. CONSTRUCTION;
HEADINGS. This Note shall be deemed to be jointly drafted by the Company and the initial Holder and shall not be construed against
any such Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect
the interpretation of, this Note. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Note instead of just the provision in which
they are found. Unless expressly indicated otherwise, all section references are to sections of this Note. Terms used in this Note and
not otherwise defined herein, but defined in the other Transaction Documents, shall have the meanings ascribed to such terms on the Closing
Date in such other Transaction Documents unless otherwise consented to in writing by the Holder.
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24. FAILURE
OR INDULGENCE NOT WAIVER. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized
representative of the waiving party. Notwithstanding the foregoing, nothing contained in this Section 24 shall permit any waiver of any
provision of Section 3(d).
25. DISPUTE
RESOLUTION.
(a) Submission
to Dispute Resolution.
(i) In
the case of a dispute relating to a Closing Bid Price, a Closing Sale Price, a Conversion Price, an Interest Conversion Price, an Alternate
Conversion Price, a VWAP or a fair market value or the arithmetic calculation of a Conversion Rate or the applicable Redemption Price
(as the case may be) (including, without limitation, a dispute relating to the determination of any of the foregoing), the Company or
the Holder (as the case may be) shall submit the dispute to the other party via electronic mail (A) if by the Company, within two (2)
Business Days after the occurrence of the circumstances giving rise to such dispute or (B) if by the Holder at any time after the Holder
learned of the circumstances giving rise to such dispute. If the Holder and the Company are unable to promptly resolve such dispute relating
to such Closing Bid Price, such Closing Sale Price, such Conversion Price, such Interest Conversion Price, such Alternate Conversion Price,
such VWAP or such fair market value, or the arithmetic calculation of such Conversion Rate or such applicable Redemption Price (as the
case may be), at any time after the second (2nd) Business Day following such initial notice by the Company or the Holder (as
the case may be) of such dispute to the Company or the Holder (as the case may be), then the Holder may, at its sole option, select an
independent, reputable investment bank to resolve such dispute.
(ii) The
Holder and the Company shall each deliver to such investment bank (A) a copy of the initial dispute submission so delivered in accordance
with the first sentence of this Section 25 and (B) written documentation supporting its position with respect to such dispute, in each
case, no later than 5:00 p.m. (New York time) by the fifth (5th) Business Day immediately following the date on which the Holder
selected such investment bank (the “Dispute Submission Deadline”) (the documents referred to in the immediately preceding
clauses (A) and (B) are collectively referred to herein as the “Required Dispute Documentation”) (it being understood
and agreed that if either the Holder or the Company fails to so deliver all of the Required Dispute Documentation by the Dispute Submission
Deadline, then the party who fails to so submit all of the Required Dispute Documentation shall no longer be entitled to (and hereby waives
its right to) deliver or submit any written documentation or other support to such investment bank with respect to such dispute and such
investment bank shall resolve such dispute based solely on the Required Dispute Documentation that was delivered to such investment bank
prior to the Dispute Submission Deadline). Unless otherwise agreed to in writing by both the Company and the Holder or otherwise requested
by such investment bank, neither the Company nor the Holder shall be entitled to deliver or submit any written documentation or other
support to such investment bank in connection with such dispute (other than the Required Dispute Documentation).
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(iii) The
Company and the Holder shall cause such investment bank to determine the resolution of such dispute and notify the Company and the Holder
of such resolution no later than ten (10) Business Days immediately following the Dispute Submission Deadline. The fees and expenses of
such investment bank shall be borne solely by the Company, and such investment bank’s resolution of such dispute shall be final
and binding upon all parties absent manifest error.
(b) Miscellaneous.
The Company expressly acknowledges and agrees that (i) this Section 25 constitutes an agreement to arbitrate between the Company and the
Holder (and constitutes an arbitration agreement) under the Nevada State arbitration law, (ii) a dispute relating to a Conversion Price
includes, without limitation, disputes as to (A) whether an issuance or sale or deemed issuance or sale of shares of Common Stock occurred
under Section 7(a), (B) the consideration per share at which an issuance or deemed issuance of shares of Common Stock occurred, (C) whether
any issuance or sale or deemed issuance or sale of shares of Common Stock was an issuance or sale or deemed issuance or sale of Excluded
Securities, (D) whether an agreement, instrument, security or the like constitutes and Option or Convertible Security and (E) whether
a Dilutive Issuance occurred, (iii) the terms of this Note and each other applicable Transaction Document shall serve as the basis for
the selected investment bank’s resolution of the applicable dispute, such investment bank shall be entitled (and is hereby expressly
authorized) to make all findings, determinations and the like that such investment bank determines are required to be made by such investment
bank in connection with its resolution of such dispute and in resolving such dispute such investment bank shall apply such findings, determinations
and the like to the terms of this Note and any other applicable Transaction Documents, (iv) the Holder (and only the Holder), in its sole
discretion, shall have the right to submit any dispute described in this Section 25 to any state or federal court sitting in the City
of Las Vegas, Clark County, Nevada in lieu of utilizing the procedures set forth in this Section 25 and (v) nothing in this Section 25
shall limit the Holder from obtaining any injunctive relief or other equitable remedies (including, without limitation, with respect to
any matters described in this Section 25).
26. NOTICES;
CURRENCY; PAYMENTS.
(a) Notices.
Whenever notice is required to be given under this Note, unless otherwise provided herein, such notice shall be given in accordance with
Section 9(f) of the Securities Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such action and the reason therefore. Without limiting the generality
of the foregoing, the Company will give written notice to the Holder (i) immediately upon any adjustment of the Conversion Price, setting
forth in reasonable detail, and certifying, the calculation of such adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with respect to any dividend or
39
distribution upon the shares of Common Stock,
(B) with respect to any grant, issuances, or sales of any Options, Convertible Securities or rights to purchase shares, warrants, securities
or other property to holders of shares of Common Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the public prior to or in conjunction with
such notice being provided to the Holder.
(b) Currency.
All dollar amounts referred to in this Note are in United States Dollars (“U.S. Dollars”), and all amounts owing under
this Note shall be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar
equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation
to any amount of currency to be converted into U.S. Dollars pursuant to this Note, the U.S. Dollar exchange rate as published in the Wall
Street Journal on the relevant date of calculation (it being understood and agreed that where an amount is calculated with reference to,
or over, a period of time, the date of calculation shall be the final date of such period of time).
(c) Payments.
Whenever any payment of cash is to be made by the Company to any Person pursuant to this Note, unless otherwise expressly set forth herein,
such payment shall be made in lawful money of the United States of America by a certified check drawn on the account of the Company and
sent via overnight courier service to such Person at such address as previously provided to the Company in writing (which address, in
the case of each of the Buyers, shall initially be as set forth on the Schedule of Buyers attached to the Securities Purchase Agreement),
provided that the Holder may elect to receive a payment of cash via wire transfer of immediately available funds by providing the Company
with prior written notice setting out such request and the Holder’s wire transfer instructions. Whenever any amount expressed to
be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day
which is a Business Day. Any amount of Principal or other amounts due under the Transaction Documents which is not paid when due shall
result in a late charge being incurred and payable by the Company in an amount equal to interest on such amount at the rate of eighteen
percent (18%) per annum from the date such amount was due until the same is paid in full (“Late Charge”).
(d) Adjustment
Notices. Whenever the Conversion Price or the Floor Price is adjusted in accordance with the terms of this Note, the Company shall
promptly provide the Holder with a written notice setting forth the Conversion Price or the Floor Price after such adjustment and setting
forth a brief statement of the facts requiring such adjustment.
27. CANCELLATION.
After all Principal, accrued Interest, Late Charges and other amounts at any time owed on this Note have been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.
28. WAIVER
OF NOTICE. To the extent permitted by law, the Company hereby irrevocably waives demand, notice, presentment, protest and all other
demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note and the Securities Purchase
Agreement.
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29. GOVERNING
LAW. This Note shall be construed and enforced in accordance with, and all questions concerning the construction, validity, interpretation
and performance of this Note shall be governed by, the internal laws of the State of Nevada, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of Nevada. Except as otherwise required by Section 25 above, the Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Las Vegas, Clark County, Nevada, for
the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted
by law. Nothing contained herein (i) shall be deemed or operate to preclude the Holder from bringing suit or taking other legal action
against the Company in any other jurisdiction to collect on the Company’s obligations to the Holder, to realize on any collateral
or any other security for such obligations, or to enforce a judgment or other court ruling in favor of the Holder or (ii) shall limit,
or shall be deemed or construed to limit, any provision of Section 25. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE
TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
30. JUDGMENT
CURRENCY.
(a) If
for the purpose of obtaining or enforcing judgment against the Company in any court in any jurisdiction it becomes necessary to convert
into any other currency (such other currency being hereinafter in this Section 30 referred to as the “Judgment Currency”)
an amount due in U.S. dollars under this Note, the conversion shall be made at the Exchange Rate prevailing on the Trading Day immediately
preceding:
(i) the
date actual payment of the amount due, in the case of any proceeding in the courts of Nevada or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(ii) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 30(a)(ii) being hereinafter referred to as the “Judgment Conversion Date”).
(b) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 30(a)(ii) above, there is a change in the Exchange
Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall pay
such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
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(c) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Note.
31. SEVERABILITY.
If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining
provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of
the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question
does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
32. MAXIMUM
PAYMENTS. Without limiting Section 9(d) of the Securities Purchase Agreement, nothing contained herein shall be deemed to establish
or require the payment of a rate of interest or other charges in excess of the maximum permitted by applicable law. In the event that
the rate of interest required to be paid or other charges hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Company to the Holder and thus refunded to the Company.
33. CERTAIN
DEFINITIONS. For purposes of this Note, the following terms shall have the following meanings:
(a) “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.
(b) “1934
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.
(c) “Adjusted
Floor Price” means as determined on an Adjustment Date, the lower of (i) the Floor Price then in effect and (ii) 20% of the
lower of (x) the closing price of the Common Stock on the Principal Market (as reported by the Principal Market) as of the Trading Day
ended immediately prior to such applicable Adjustment Date and (y) the quotient of (I) the sum of each the closing prices of the Common
Stock on the Principal Market (as reported by the Principal Market) on each Trading Day on the five (5) Trading Day period ended on, and
including, the Trading Day ended immediately prior to such applicable Adjustment Date, divided by (II) five (5). All such determinations
to be appropriately adjusted for any share split, share dividend, share combination or other similar transaction during any such measuring
period.
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(d) “Adjustment
Right” means any right granted with respect to any securities issued in connection with, or with respect to, any issuance or
sale (or deemed issuance or sale in accordance with Section 7) of shares of Common Stock (other than rights of the type described in Section
6(a) hereof) that could result in a decrease in the net consideration received by the Company in connection with, or with respect to,
such securities (including, without limitation, any cash settlement rights, cash adjustment or other similar rights).
(e) “Affiliate”
means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that “control” of a Person means the power directly
or indirectly either to vote 10% or more of the shares having ordinary voting power for the election of directors of such Person or direct
or cause the direction of the management and policies of such Person whether by contract or otherwise.
(f) “Alternate
Conversion Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant to
wire instructions delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the VWAP of the
Common Stock on the Trading Day immediately preceding the time that the Holder delivers the applicable Conversion Notice and (B) the difference
obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Share
Delivery Deadline with respect to such Alternate Conversion from (II) the quotient obtained by dividing (x) the applicable Conversion
Amount that the Holder has elected to be the subject of the applicable Alternate Conversion, by (y) the applicable Alternate Conversion
Price without giving effect to clause (x) of such definition.
(g) “Alternate
Conversion Price” means, with respect to any Alternate Conversion that price which shall be the lower of (i) the applicable
Conversion Price as in effect on the applicable Conversion Date of the applicable Alternate Conversion, and (ii) the greater of (x) the
Floor Price then in effect and (y)(1) with respect to any Alternate Optional Conversion, 90% of the lowest trading price of the Common
Stock, and (2) with respect to an Alternate Event of Default Conversion, 80% of the lowest trading price during the ten (10) consecutive
Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion
Notice (such period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted
for any share dividend, stock split, share combination, reclassification or similar transaction that proportionately decreases or increases
the shares of Common Stock during such Alternate Conversion Measuring Period.
(h) “Approved
Stock Plan” shall have the meaning as set forth in the Securities Purchase Agreement.
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(i) “Asset
Sale” means any single transaction or series of related transactions (other than transactions in the ordinary course of business
consistent with past practice) by which the Company or any Subsidiary, directly or indirectly, sells, leases, licenses, assigns, transfers,
spins-off, splits-off, closes, conveys, or otherwise disposes of any assets or rights to such assets; provided, however, that the term
“Asset Sale” shall not include: (i) any sale, lease, license, assignment, transfer, spin-off, split-off, closure, conveyance,
or other disposition of inventory, products, or services in the ordinary course of business consistent with past practice; (ii) any sale,
lease, license, assignment, transfer, spin-off, split-off, closure, conveyance, or other disposition of immaterial obsolete, worn-out,
or surplus property or assets, or property or assets no longer used or useful in the business of the Company or any Subsidiary; (iii)
any sale, lease, license, assignment, transfer, spin-off, split-off, closure, conveyance, or other disposition of assets or rights to
such assets among the Company and its wholly owned Subsidiaries; (iv) any grant of a Lien permitted under the terms of this Note or the
Securities Purchase Agreement; (v) any disposition of cash or cash equivalents in the ordinary course of business; (vi) any disposition
of assets with an aggregate fair market value (as determined in good faith by the Company’s board of directors) of less than $500,000
in any fiscal year; and (vii) any other transaction approved in writing by the Required Holders (as defined in the Securities Purchase
Agreement).
(j) “Attribution
Parties” means, collectively, the following Persons and entities: (i) any investment vehicle, including, any funds, feeder funds
or managed accounts, currently, or from time to time after the Issuance Date, directly or indirectly managed or advised by the Holder’s
investment manager or any of its Affiliates or principals, (ii) any direct or indirect Affiliates of the Holder or any of the foregoing,
(iii) any Person acting or who could be deemed to be acting as a Group together with the Holder or any of the foregoing and (iv) any other
Persons whose beneficial ownership of the Company’s Common Stock would or could be aggregated with the Holder’s and the other
Attribution Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose of the foregoing is to subject collectively
the Holder and all other Attribution Parties to the Maximum Percentage.
(k) “Available
Cash” means, with respect to any date of determination, an amount equal to the aggregate amount of the Cash of the Company and
its Subsidiaries (excluding for this purpose cash held in restricted accounts or otherwise unavailable for unrestricted use by the Company
or any of its Subsidiaries for any reason) as of such date of determination held in bank accounts of financial banking institutions in
the United States of America.
(l) “Business
Day” means any day other than Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial
banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
(m) “Cash”
of the Company and its Subsidiaries on any date shall be determined from such Persons’ books maintained in accordance with GAAP,
and means, without duplication, the cash, cash equivalents and Eligible Marketable Securities accrued by the Company and its wholly owned
Subsidiaries on a consolidated basis on such date.
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(n) “Change
of Control” means any Fundamental Transaction other than (i) any merger of the Company or any of its, direct or indirect, wholly-owned
Subsidiaries with or into any of the foregoing Persons, (ii) any reorganization, recapitalization or reclassification of the Common Stock
in which holders of the Company’s voting power immediately prior to such reorganization, recapitalization or reclassification continue
after such reorganization, recapitalization or reclassification to hold publicly traded securities and, directly or indirectly, are, in
all material respects, the holders of the voting power of the surviving entity (or entities with the authority or voting power to
elect the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities) after such reorganization,
recapitalization or reclassification, or (iii) pursuant to a migratory merger effected solely for the purpose of changing the jurisdiction
of incorporation of the Company or any of its Subsidiaries.
(o) “Change
of Control Redemption Premium” means 120%.
(p) “Closing
Bid Price” and “Closing Sale Price” means, for any security as of any date, the last closing bid price and
last closing trade price, respectively, for such security on the Principal Market, as reported by the Reporting Service, or, if the Principal
Market begins to operate on an extended hours basis and does not designate the closing bid price or the closing trade price (as the case
may be) then the last bid price or last trade price, respectively, of such security prior to 4:00 p.m., New York time, as reported by
the Reporting Service, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such
security is listed or traded as reported by the Reporting Service, or if the foregoing do not apply, the last closing bid price or last
trade price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported
by the Reporting Service, or, if no closing bid price or last trade price, respectively, is reported for such security by the Reporting
Service, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in The Pink
Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the Closing Bid Price or the Closing
Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Bid Price or the Closing
Sale Price (as the case may be) of such security on such date shall be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then such dispute shall be
resolved in accordance with the procedures in Section 25. All such determinations shall be appropriately adjusted for any stock splits,
share dividends, share combinations, recapitalizations or other similar transactions during such period.
(q) “Closing
Date” shall have the meaning set forth in the Securities Purchase Agreement, which date is the date the Company initially issued
Notes pursuant to the terms of the Securities Purchase Agreement.
(r) “Common
Stock” means (i) the Company’s common stock, $0.0001 par value per share, and (ii) any capital stock into which such
shares of Common Stock shall have been exchanged or any shares of capital stock resulting from a reclassification of such shares of Common
Stock.
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(s) “Conversion
Floor Price Condition” means that the relevant Alternate Conversion Price or Interest Conversion Price is being determined based
on clause (x) of such definition.
(t)
“Convertible Securities” means any shares or other security (other than Options) that is at any time and under any
circumstances, directly or indirectly, convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof
to acquire, any shares of Common Stock.
(u) “Current
Subsidiary” means any Person in which the Company on the Subscription Date, directly or indirectly, (i) owns any of the outstanding
share capital or holds any equity or similar interest of such Person or (ii) controls or operates all or any part of the business, operations
or administration of such Person, and all of the foregoing, collectively, “Current Subsidiaries”.
(v) “Eligible
Market” means The New York Stock Exchange, the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Select Market, the
Nasdaq Global Market or the Principal Market.
(w) “Eligible
Marketable Securities” as of any date means marketable securities which would be reflected on a consolidated balance sheet of
the Company and its Subsidiaries prepared as of such date in accordance with GAAP, and which are permitted under the Company’s investment
policies as in effect on the Issuance Date or approved thereafter by the Company’s board of directors.
(x) “Equity
Conditions” means, with respect to a given date of determination: (i) on each day during the period beginning fifteen (15) calendar
days prior to such applicable date of determination and ending on and including such applicable date of determination either (x) one or
more Registration Statements filed pursuant to the Registration Rights Agreement shall be effective and the prospectus contained therein
shall be available on such applicable date of determination (with, for the avoidance of doubt, any shares of Common Stock previously sold
pursuant to such prospectus deemed unavailable) for the resale of all shares of Common Stock to be issued in connection with the event
requiring this determination (or issuable upon conversion of the Conversion Amount being redeemed, as applicable, in the event requiring
this determination at the Alternate Conversion Price then in effect (without regard to any limitations on conversion set forth herein))
(each, a “Required Minimum Securities Amount”), in each case, in accordance with the terms of the Registration Rights
Agreement and there shall not have been during such period any Grace Periods (as defined in the Registration Rights Agreement) or (y)
all Registrable Securities shall be eligible for sale pursuant to Rule 144 (as defined in the Securities Purchase Agreement) without the
need for registration under any applicable federal or state securities laws (in each case, disregarding any limitation on conversion of
the Notes, other issuance of securities with respect to the Notes) and no Current Public Information Failure (as defined in the Registration
Rights Agreement) exists or is continuing; (ii) on each day during the period beginning fifteen (15) calendar days
46
prior to the applicable
date of determination and ending on and including the applicable date of determination (the “Equity Conditions Measuring Period”),
the shares of Common Stock (including all Registrable Securities) is listed or designated for quotation (as applicable) on an Eligible
Market and shall not have been suspended from trading on an Eligible Market (other than suspensions of not more than two (2) days and
occurring prior to the applicable date of determination due to business announcements by the Company) nor shall delisting or suspension
by an Eligible Market have been threatened (with a reasonable prospect of delisting occurring after giving effect to all applicable notice,
appeal, compliance and hearing periods) or reasonably likely to occur or pending as evidenced by (A) a writing by such Eligible Market
or (B) the Company falling below the minimum listing maintenance requirements of the Eligible Market on which the Common Stock is then
listed or designated for quotation (as applicable); (iii) during the Equity Conditions Measuring Period, the Company shall have delivered
all shares of Common Stock issuable upon conversion of this Note on a timely basis as set forth in Section 3 hereof and all other shares
of share capital required to be delivered by the Company on a timely basis as set forth in the other Transaction Documents; (iv) any shares
of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the Conversion Amount
being redeemed in the event requiring this determination) may be issued in full without violating Section 3(d) hereof; (v) any shares
of Common Stock to be issued in connection with the event requiring determination (or issuable upon conversion of the Conversion Amount
being redeemed in the event requiring this determination (without regards to any limitations on conversion set forth herein)) may be issued
in full without violating the rules or regulations of the Eligible Market on which the Common Stock is then listed or designated for quotation
(as applicable); (vi) on each day during the Equity Conditions Measuring Period, no public announcement of a pending, proposed or intended
Fundamental Transaction shall have occurred which has not been abandoned, terminated or consummated; (vii) the Company shall have no knowledge
of any fact that would reasonably be expected to cause (1) any Registration Statement required to be filed pursuant to the Registration
Rights Agreement to not be effective or the prospectus contained therein to not be available for the resale of the applicable Required
Minimum Securities Amount of Registrable Securities in accordance with the terms of the Registration Rights Agreement or (2) any Registrable
Securities to not be eligible for sale pursuant to Rule 144 without the need for registration under any applicable federal or state securities
laws (in each case, disregarding any limitation on conversion of the Notes, other issuance of securities with respect to the Notes) and
no Current Public Information Failure exists or is continuing; (viii) the Holder shall not be in (and no other holder of Notes shall be
in) possession of any material, non-public information provided to any of them by the Company, any of its Subsidiaries or any of their
respective affiliates, employees, officers, representatives, agents or the like; (ix) on each day during the Equity Conditions Measuring
Period, the Company otherwise shall have been in compliance with each, and shall not have breached any representation or warranty in any
material respect (other than representations or warranties subject to material adverse effect or materiality, which may not be breached
in any respect) or any covenant or other term or condition of any Transaction Document, including, without limitation, the Company shall
not have failed to timely make any payment pursuant to any Transaction Document; (x) there shall not have occurred any Volume Failure
or Price Failure as of such applicable date of determination; (xi) on the applicable date of determination (A) no Authorized Share Failure
shall exist or be continuing and the applicable Required Minimum Securities Amount of shares of Common Stock are available under the Amended
and Restated Articles of Incorporation of the Company and reserved by the Company to be issued pursuant to the Notes and (B) all shares
of Common Stock to be issued in connection with the event requiring this determination (or issuable upon conversion of the Conversion
Amount being redeemed in the event requiring this determination (without regards to any limitations on conversion set forth herein)) may
be issued in full without resulting in an Authorized Share Failure; (xii) on each day during the Equity Conditions Measuring Period, there
shall not have occurred and there shall not exist an Event of Default or an event that with the passage of time or giving of notice would
constitute an Event of Default; (xiii) no bona fide dispute shall exist, by and between any of holder of Notes, the Company, the Principal
Market (or such applicable Eligible Market in which the Common Stock of the Company is then principally trading) and/or FINRA with respect
to any term or provision of any Note or any other Transaction Document and (xiv) the shares of Common Stock issuable pursuant the event
requiring the satisfaction of the Equity Conditions are duly authorized and listed and eligible for trading without restriction on an
Eligible Market.
47
(y) “Equity
Conditions Failure” means that on any day during the period commencing fifteen (15) Trading Days prior to the applicable date
of determination, the Equity Conditions have not been satisfied (or waived in writing by the Holder).
(z) “Event
Market Price” means, with respect to any Share Combination Event Date, the quotient determined by dividing (x) the sum of the
VWAP of the Common Stock for each of the five (5) Trading Days with the lowest VWAP of the Common Stock during the fifteen (15) consecutive
Trading Day period ending and including the Trading Day immediately preceding the sixteenth (16th) Trading Day after such Share Combination
Event Date, divided by (y) five (5).
(aa) “Event
of Default Redemption Premium” means 130%.
(bb) “Excluded
Securities” shall have the meaning as set forth in the Securities Purchase Agreement.
(cc)
“FactSet” means FactSet Research Systems Inc.
(dd) “Fiscal
Quarter” means each of the fiscal quarters adopted by the Company for financial reporting purposes that correspond to the Company’s
fiscal year as of the date hereof that ends on December 31st.
(ee) “Floor
Price” means $2.85 (as adjusted for stock splits, stock dividends, stock combinations, recapitalizations and similar events),
or, subject to the rules and regulations of the Principal Market, such lower amount as the Company and the Required Holders shall mutually
agree with respect to all Notes then outstanding, provided, that if on the effective date of the Registration Statement and every six
(6) months thereafter (each, an “Adjustment Date”), the Floor Price then in effect is higher than the Adjusted Floor
Price, with respect to the applicable Adjustment Date, subject to the rules and regulations of the Principal Market on such Adjustment
Date the Floor Price shall be automatically lowered to such applicable Adjusted Floor Price.
48
(ff) “Fundamental
Transaction” means (A) that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise,
in one or more related transactions, (i) consolidate or merge with or into (whether or not the Company is the surviving corporation) another
Subject Entity, or (ii) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of
the Company or any of its “significant subsidiaries” (as defined in Rule 1-02 of Regulation S-X) to one or more Subject Entities,
or (iii) make, or allow one or more Subject Entities to make, or allow the Company to be subject to or have its shares of Common Stock
be subject to or party to one or more Subject Entities making, a purchase, tender or exchange offer that is accepted by the holders of
at least either (x) 50% of the outstanding shares of Common Stock, (y) 50% of the outstanding shares of Common Stock calculated as if
any shares of Common Stock held by all Subject Entities making or party to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or (z) such number of shares of Common Stock such that all Subject Entities
making or party to, or Affiliated with any Subject Entity making or party to, such purchase, tender or exchange offer, become collectively
the beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of at least 50% of the outstanding shares of Common Stock, or (iv)
consummate a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization,
spin-off or scheme of arrangement) with one or more Subject Entities whereby all such Subject Entities, individually or in the aggregate,
acquire, either (x) at least 50% of the outstanding shares of Common Stock, (y) at least 50% of the outstanding shares of Common Stock
calculated as if any shares of Common Stock held by all the Subject Entities making or party to, or Affiliated with any Subject Entity
making or party to, such stock or share purchase agreement or other business combination were not outstanding; or (z) such number of shares
of Common Stock such that the Subject Entities become collectively the beneficial owners (as defined in Rule 13d-3 under the 1934 Act)
of at least 50% of the outstanding shares of Common Stock, or (v) reorganize, recapitalize or reclassify its shares of Common Stock, (B)
that the Company shall, directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions,
allow any Subject Entity individually or the Subject Entities in the aggregate to be or become the “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, whether through acquisition, purchase, assignment, conveyance, tender,
tender offer, exchange, reduction in outstanding shares of Common Stock, merger, consolidation, business combination, reorganization,
recapitalization, spin-off, scheme of arrangement, reorganization, recapitalization or reclassification or otherwise in any manner whatsoever,
of either (x) at least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock, (y) at
least 50% of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock not held by all such Subject
Entities as of the date of this Note calculated as if any shares of Common Stock held by all such Subject Entities were not outstanding,
or (z) a percentage of the aggregate ordinary voting power represented by issued and outstanding shares of Common Stock or other equity
securities of the Company sufficient to allow such Subject Entities to effect a statutory short form merger or other transaction requiring
other shareholders of the Company to surrender their shares of Common Stock without approval of the shareholders of the Company or (C)
directly or indirectly, including through subsidiaries, Affiliates or otherwise, in one or more related transactions, the issuance of
or the entering into any other instrument or transaction structured in a manner to circumvent, or that circumvents, the intent of this
definition in which case this definition shall be construed and implemented in a manner otherwise than in strict conformity with the terms
of this definition to the extent necessary to correct this definition or any portion of this definition which may be defective or inconsistent
with the intended treatment of such instrument or transaction.
49
(gg) “GAAP”
means United States generally accepted accounting principles, consistently applied.
(hh) “Group”
means a “group” as that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5 thereunder.
(ii) “Holder
Pro Rata Amount” means a fraction (i) the numerator of which is the original Principal amount of this Note on the Closing Date
plus the original Principal amount of any Other Notes held by the Holder outstanding on the date of determination and (ii) the denominator
of which is the aggregate original principal amount of all Notes issued pursuant to the Securities Purchase Agreement on the Closing Date
plus the aggregate original Principal amount of any Other Notes outstanding on the date of determination.
(jj) “Indebtedness”
shall have the meaning ascribed to such term in the Securities Purchase Agreement.
(kk) “Interest
Conversion Price” means, with respect to a particular date of determination, the lower of (i) the Conversion Price then in effect,
and (ii) the greater of (x) the Floor Price and (y) 90% of the lowest trading price of the Common Stock during the ten (10) consecutive
Trading Day period ending and including the Trading Day immediately preceding the delivery or deemed delivery of the applicable Conversion
Notice. All such determinations to be appropriately adjusted for any stock split, share dividend, share combination or other similar transaction
during any such measuring period.
(ll) “Interest
Floor Amount” means an amount in cash, to be delivered by wire transfer of immediately available funds pursuant to wire instructions
delivered to the Company by the Holder in writing, equal to the product obtained by multiplying (A) the higher of (I) the highest price
that the Common Stock traded at on the Trading Day immediately preceding the relevant Interest Date and (II) the applicable Interest Conversion
Price and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder
on the applicable Share Delivery Deadline with respect to such Interest Date from (II) the quotient obtained by dividing (x) the applicable
Conversion Amount that the Holder has elected to be the subject of the applicable Interest Date, by (y) the applicable Interest Conversion
Price without giving effect to clause (x) of such definition.
50
(mm) “Interest
Date” means October 1, 2026 and the first calendar day of each Fiscal Quarter thereafter.
(nn) “Interest
Rate” means, as of any date of determination, eight and one quarter percent (8.25%) per annum, subject to adjustment from time
to time in accordance with Section 2.
(oo) “Investment”
means any beneficial ownership (including shares, stock, partnership or limited liability company interests) of or in any Person, or any
loan, advance or capital contribution to any Person or the acquisition of all, or substantially all, of the assets of another Person or
the purchase of any assets of another Person for greater than the fair market value of such assets.
(pp) “Maturity
Date” shall mean July 16, 2028; provided, however, the Maturity Date may be extended for an additional six (6) months by mutual
written consent of the Company and the Holder or at the option of the Holder (i) in the event that, and for so long as, an Event of Default
shall have occurred and be continuing or any event shall have occurred and be continuing that with the passage of time and the failure
to cure would result in an Event of Default or (ii) through the date that is twenty (20) Business Days after the consummation of a Fundamental
Transaction in the event that a Fundamental Transaction is publicly announced or a Change of Control Notice is delivered prior to the
Maturity Date, provided further that if a Holder elects to convert some or all of this Note pursuant to Section 3 hereof, and the Conversion
Amount would be limited pursuant to Section 3(d) hereunder, the Maturity Date shall automatically be extended until such time as such
provision shall not limit the conversion of this Note.
(qq) “New
Subsidiary” means, as of any date of determination, any Person in which the Company after the Subscription Date, directly or
indirectly, (i) owns or acquires more than 50% of the of the outstanding share capital or holds more than 50% of the equity or similar
interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “New Subsidiaries”.
(rr) “Options”
means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.
(ss) “Parent
Entity” of a Person means an entity that, directly or indirectly, controls the applicable Person and whose common stock or equivalent
equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the Fundamental Transaction.
(tt) “Permitted
Equipment Indebtedness” means Indebtedness secured by Permitted Liens or unsecured but, in each case, as described in clauses
(iv) and (v) of the definition of Permitted Liens.
(uu) “Permitted
Indebtedness” means (i) Indebtedness evidenced by this Note and the Other Notes, (ii) Indebtedness set forth on Schedule 3(s)
to the Securities Purchase Agreement, as in effect as of the Issuance Date, and (iii) Permitted Equipment Indebtedness in an aggregate
amount not to exceed $250,000.
51
(vv)
“Permitted Liens” means (i) any Lien for taxes not yet due or delinquent or being contested in good faith by
appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (ii) any statutory Lien arising
in the ordinary course of business by operation of law with respect to a liability that is not yet due or delinquent, (iii) any Lien
created by operation of law, such as materialmen’s liens, mechanics’ liens and other similar liens, arising in the
ordinary course of business with respect to a liability that is not yet due or delinquent or that are being contested in good faith
by appropriate proceedings, (iv) Liens (A) upon or in any equipment acquired or held by the Company or any of its Subsidiaries to
secure the purchase price of such equipment or Indebtedness incurred solely for the purpose of financing the acquisition or lease of
such equipment, or (B) in connection with the acquisition or refinancing of such equipment, provided that the Lien is confined
solely to the property so acquired and improvements thereon, and the proceeds of such equipment, in either case, with respect to
Indebtedness in an aggregate amount not to exceed $250,000, (v) Liens incurred in connection with the extension, renewal or
refinancing of the Indebtedness secured by Liens of the type described in clause (iv) above, provided that any extension, renewal or
replacement Lien shall be limited to the property encumbered by the existing Lien and the principal amount of the Indebtedness being
extended, renewed or refinanced does not increase, (vi) Liens in favor of customs and revenue authorities arising as a matter of law
to secure payments of custom duties in connection with the importation of goods, and (vii) Liens arising from judgments, decrees or
attachments in circumstances not constituting an Event of Default under Section 4(a)(xii).
(ww)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a company, a
corporation, a trust, an unincorporated organization, any other entity or a government or any department or agency thereof.
(xx) “Price
Failure” means, with respect to a particular date of determination, the VWAP of the Common Stock during the twenty (20) Trading
Day period ending on the Trading Day immediately preceding such date of determination fails to exceed $5.00 per share of Common Stock
(as adjusted for any stock splits, share dividends, share combinations, recapitalizations or other similar transactions occurring after
the Issuance Date).
(yy)
“Prime Rate” means the “prime rate” which from time to time published in the “Money
Rates” column of The Wall Street Journal (Eastern Edition, New York Metro); provided, however, if the Money Rates column of
The Wall Street Journal (Eastern Edition, New York Metro) ceases to be published or otherwise does not designate a “prime
rate” as of a Business Day, the Holder has the right to obtain such information from a similar business publication of its
selection.
(zz) “Principal
Market” means the Nasdaq Capital Market.
52
(aaa)
“Redemption Notices” means, collectively, the Optional Redemption Notices, the Event of Default Redemption
Notices, the Asset Sale Optional Redemption Notices, the Subsequent Placement Optional Redemption Notices and the Change of Control
Redemption Notices, and each of the foregoing, individually, a “Redemption Notice.”
(bbb) “Redemption
Prices” means, collectively, the Optional Redemption Price, the Event of Default Redemption Price, the Asset Sale Optional Redemption
Price, the Change of Control Redemption Price and the Subsequent Placement Optional Redemption Price, and each of the foregoing, individually,
a “Redemption Price.”
(ccc) “Registration
Rights Agreement” means that certain registration rights agreement, dated as of the Initial Closing Date, by and among the Company
and the initial holders of the Notes relating to, among other things, the registration of the resale of the shares of Common Stock issuable
upon conversion of the Notes or otherwise pursuant to the terms of the Notes, as may be amended from time to time.
(ddd) “Reporting
Service” means either Bloomberg L.P. or FactSet Research Systems Inc., as determined by Investor from time to time.
(eee)
“Revenue” means, with respect to any given cash flow, receivable or other general intangible, the revenue
directly attributable thereto of the Company or any of its Subsidiaries, as determined in accordance with GAAP.
(fff)
“SEC” means the United States Securities and Exchange Commission or the successor thereto.
(ggg) “Securities
Purchase Agreement” means that certain securities purchase agreement, dated as of the Subscription Date, by and among the Company
and the initial holders of the Notes pursuant to which the Company issued the Notes, as may be amended from time to time.
(hhh) “Security
Agreement” shall have the meaning as set forth in the Securities Purchase Agreement.
(iii) “Stockholder
Approval” shall have the meaning as set forth in the Securities Purchase Agreement.
(jjj) “Subscription
Date” means July 16, 2026.
(kkk) “Subsidiaries”
means, as of any date of determination, collectively, all Current Subsidiaries and all New Subsidiaries, and each of the foregoing, individually,
a “Subsidiary.”
(lll) “Subject
Entity” means any Person, Persons or Group or any Affiliate or associate of any such Person, Persons or Group.
(mmm) “Successor
Entity” means the Person (or, if so elected by the Holder, the Parent Entity) formed by, resulting from or surviving any Fundamental
Transaction or the Person (or, if so elected by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been
entered into.
53
(nnn) “Trading
Day” means, as applicable, (x) with respect to all price or trading volume determinations relating to the shares of Common Stock,
any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for
the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded, provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less
than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market
(or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour
ending at 4:00 p.m., New York time) unless such day is otherwise designated as a Trading Day in writing by the Holder or (y) with respect
to all determinations other than price determinations relating to the Common Stock, any day on which The New York Stock Exchange (or any
successor thereto) is open for trading of securities.
(ooo) “Volume
Failure” means, with respect to a particular date of determination, the aggregate daily dollar trading volume (as reported on
the Reporting Service) of the Common Stock on the Principal Market on any Trading Day during the fifteen (15) Trading Day period ending
on the Trading Day immediately preceding such date of determination (such period, the “Volume Failure Measuring Period”),
is less than $500,000 (as adjusted for any stock splits, share dividends, share combinations, recapitalizations or other similar transactions
occurring after the Issuance Date).
(ppp) “VWAP”
means, for any security as of any date, the dollar volume-weighted average price for such security on the Principal Market (or, if the
Principal Market is not the principal trading market for such security, then on the principal securities exchange or securities market
on which such security is then traded), during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time,
as reported by the Reporting Service through its “VAP” function (set to 09:30 start time and 16:00 end time) or FactSet or,
if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30 a.m., New York time, and ending at 4:00 p.m., New York time, as reported
by the Reporting Service, or, if no dollar volume-weighted average price is reported for such security by the Reporting Service for such
hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for such security as
reported in The Pink Open Market (or a similar organization or agency succeeding to its functions of reporting prices). If the VWAP cannot
be calculated for such security on such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and the Holder are unable to agree upon the fair market value
of such security, then such dispute shall be resolved in accordance with the procedures in Section 25. All such determinations shall be
appropriately adjusted for any share dividend, stock split, share combination, recapitalization or other similar transaction during such
period.
54
34. DISCLOSURE.
Upon delivery by the Company to the Holder (or receipt by the Company from the Holder) of any notice in accordance with the terms of this
Note, unless the Company has in good faith determined that the matters relating to such notice do not constitute material, non-public
information relating to the Company or any of its Subsidiaries, the Company shall on or prior to 9:00 a.m., New York time, on the Business
Day immediately following such notice delivery date, publicly disclose such material, non-public information on a Current Report on Form
8-K or otherwise. In the event that the Company believes that a notice contains material, non-public information relating to the Company
or any of its Subsidiaries, the Company so shall indicate to the Holder explicitly in writing in such notice (or immediately upon receipt
of notice from the Holder, as applicable), and in the absence of any such written indication in such notice (or notification from the
Company immediately upon receipt of notice from the Holder), the Holder shall be entitled to presume that information contained in the
notice does not constitute material, non-public information relating to the Company or any of its Subsidiaries. Nothing contained in this
Section 34 shall limit any obligations of the Company, or any rights of the Holder, under Section 4(i) of the Securities Purchase Agreement.
35. ABSENCE
OF TRADING AND DISCLOSURE RESTRICTIONS. The Company acknowledges and agrees that the Holder is not a fiduciary or agent of the Company
and that the Holder shall have no obligation to (a) maintain the confidentiality of any information provided by the Company or (b) refrain
from trading any securities while in possession of such information in the absence of a written non-disclosure agreement signed by an
officer of the Holder that explicitly provides for such confidentiality and trading restrictions. In the absence of such an executed,
written non-disclosure agreement, the Company acknowledges that the Holder may freely trade in any securities issued by the Company, may
possess and use any information provided by the Company in connection with such trading activity, and may disclose any such information
to any third party.
[signature page follows]
55
IN WITNESS WHEREOF, the Company
has caused this Note to be duly executed as of the Issuance Date set forth above.
SADOT GROUP INC.
By:
Name: Haggai Ravid
Title: Chief Executive Officer
Senior Convertible Promissory Note - Signature Page
EXHIBIT
I
SADOT GROUP INC.
CONVERSION NOTICE
Reference is made to the Senior
Secured Convertible Promissory Note (the “Note”) issued to the undersigned by Sadot Group Inc., a Nevada corporation
(the “Company”). In accordance with and pursuant to the Note, the undersigned hereby elects to convert the Conversion
Amount (as defined in the Note) of the Note indicated below into shares of Common Stock, $0.0001 par value per share (the “Common
Stock”), of the Company, as of the date specified below. Capitalized terms not defined herein shall have the meaning as set
forth in the Note.
Date of Conversion:
Aggregate Principal to be converted:
Aggregate accrued and unpaid Interest and accrued and unpaid Late Charges with respect to such portion of the Aggregate Principal and such Aggregate Interest to be converted:
AGGREGATE CONVERSION AMOUNT TO BE CONVERTED:
Please confirm the following information:
Conversion Price:
Number of shares of Common Stock to be issued:
If this Conversion Notice is being
delivered with respect to an Alternate Conversion, check here if Holder is electing to use the following Alternate Conversion Price:____________
Please issue the shares of Common Stock into which
the Note is being converted to Holder, or for its benefit, as follows:
Check here if requesting
delivery as a certificate to the following name and to the following address:
Issue to:
Check here if requesting delivery by Deposit/Withdrawal at Custodian as follows:
DTC Participant:
DTC Number:
Account Number:
Date: _____________ __, ____
_________________________
Name of Registered Holder
By:
Name:
Title:
Tax ID:_____________________
E-mail Address:
Exhibit II
ACKNOWLEDGMENT
The Company hereby (a) acknowledges
this Conversion Notice, (b) certifies that the above indicated number of shares of Common Stock [are][are not] eligible to be resold by
the Holder either (i) pursuant to Rule 144 (subject to the Holder’s execution and delivery to the Company of a customary 144 representation
letter) or (ii) an effective and available registration statement and (c) hereby directs _________________ to issue the above indicated
number of shares of Common Stock in accordance with the Transfer Agent Instructions dated _____________, 20__ from the Company and acknowledged
and agreed to by ________________________.
SADOT GROUP INC.
By:
Name: Haggai Ravid
Title: Chief Executive Officer
EX-10.1 — EXHIBIT 10.1
EX-10.1
Filename: e7788_ex10-1.htm · Sequence: 5
EXHIBIT 10.1
INTELLECTUAL PROPERTY PURCHASE AGREEMENT
Dated as of July 14, 2026
by and between
LITIAL LTD, a private company limited by shares
organized under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China, with its registered office
at 21st Floor, CMA Building, 64 Connaught Road Central, Hong Kong (“Seller” or “Litial”)
and
SADOT GROUP INC., a corporation organized under
the laws of the State of Nevada, United States of America, with principal offices at 295 E Renfro Street, Suite 209, Burleson, Texas 76028
(Nasdaq: SDOT) (“Buyer” or “Sadot”)
Seller and Buyer are each a “Party”
and together the “Parties”.
RECITALS
WHEREAS, Seller is the sole and exclusive owner of
certain software, source code, models, data pipelines, technical documentation and related intellectual property, marketed under the name
“TradeIQ”, consisting of a predictive-intelligence software layer designed to operate alongside commodity trading and
risk management (“CTRM”) platforms (the “Purchased IP”, more fully defined in Schedule A);
WHEREAS, Buyer wishes to acquire all right, title
and interest in and to the Purchased IP, on the terms and subject to the conditions of this Agreement;
WHEREAS, the Purchased IP has been or will be developed
entirely on a clean-room basis by personnel engaged by Seller for that purpose, free of any third-party encumbrance other than as expressly
disclosed in Schedule B;
WHEREAS, the Parties have agreed that the equity portion
of the consideration will be paid in (i) Common Stock of Buyer and (ii) a new series of non-voting, non-convertible preferred stock of
Buyer designated as the “Series C Non-Voting Non-Convertible Preferred Stock” (the “Series C Preferred”),
to be authorized pursuant to a Certificate of Designation filed by Buyer with the Secretary of State of Nevada on or before the Closing
Date in the form attached as Schedule H;
WHEREAS, the Parties acknowledge that the Series C
Preferred is structured as non-voting, non-convertible at issuance, and perpetual (with no mandatory redemption obligation and no right
of holders to require cash redemption other than upon an Insolvency Event of Buyer) in order to (a) preserve Buyer’s representations
to The Nasdaq Stock Market LLC in its Compliance Plan letter dated June 22, 2026 regarding the non-convertibility-by-design of legacy
acquisition-consideration instruments, (b) avoid the Series C Preferred being counted toward, or triggering, the change-of-control aggregation
threshold under Nasdaq Listing Rule 5635(b) or the share-issuance approval threshold under Nasdaq Listing Rule 5635(d) at the time of
issuance, and (c) qualify the Series C Preferred as equity (and not as a liability or as mezzanine/temporary equity) on the financial
statements of both Parties under U.S. generally accepted accounting principles (including ASC 480, Distinguishing Liabilities from Equity)
and equivalent international standards;
WHEREAS, the Parties record that this is an arm’s-length
transaction and that, as of the Contract Date, neither Party is a related party of the other within the meaning of Item 404 of Regulation
S-K of the U.S. Securities and Exchange Commission;
1
NOW, THEREFORE, in consideration of the mutual
covenants set out below, the Parties agree as follows.
1. DEFINITIONS
In this Agreement:
“Affiliate” means, with respect
to a Party, any entity that directly or indirectly controls, is controlled by, or is under common control with that Party.
“Assignee” has the meaning given
in Clause 13.2.
“Business Day” means a day other
than a Saturday, Sunday or public holiday in Hong Kong or the State of Texas, USA.
“Certificate of Designation” means
the Certificate of Designation, Preferences, Rights and Limitations of Series C Non-Voting Non-Convertible Preferred Stock of Sadot Group
Inc., to be filed with the Secretary of State of Nevada on or before the Closing Date, substantially in the form set out in Schedule
H.
“Closing” means the consummation
of the transactions contemplated by this Agreement in accordance with Clause 4.
“Closing Date” means July 14,
2026, or such other date as the Parties may mutually agree in writing.
“Common Stock” means the common
stock of Buyer, par value $0.0001 per share.
“Consideration Shares” means the
two hundred thousand 200,000 shares of Common Stock to be issued by Buyer to Seller (or its Assignees) at Closing pursuant to Clause
3.3.
“Contract Date” means July 14,
2026, the date this Agreement is executed by both Parties.
“Delivery Date” means the date,
no later than twenty-one (21) calendar days after the Contract Date, on which Seller completes delivery of the Purchased IP to
Buyer in accordance with Clause 4.5.
“Encumbrance” means any lien, charge,
security interest, mortgage, pledge, claim, license, option, right of first refusal, or other restriction of any kind.
“Exchange Cap” has the meaning
given in Clause 3.5.
“Preferred Consideration Shares”
means the three thousand nine hundred fifty (3,950) shares of Series C Preferred to be issued by Buyer to Seller (or its Assignees)
at Closing pursuant to Clause 3.4, with a Stated Value of US$1,000 per share and an aggregate Stated Value of US$3,950,000.
“Purchased IP” means the items
set out in Schedule A, including all source code, object code, models, model weights, training data sets, documentation, know-how,
trade secrets, copyrights, trademarks (including the “TradeIQ” name and any associated logos), domain names, and any patents
or patent applications.
“Reference Price” means US$10.00
per share, the fixed agreed value of each Consideration Share for purposes of allocating the Purchase Price.
“Required Holders” means, at any
time, the holders of a majority of the then-outstanding shares of Series C Preferred.
“Seller’s Knowledge” means
the actual knowledge, after reasonable inquiry, of the directors of Seller and any other natural person designated by Seller in writing
as a knowledge party for purposes of this Agreement.
2
“Series C Preferred” has the meaning
given in the Recitals.
“Stated Value” means United
States Dollars One Thousand (US$1,000) per share of Series C Preferred.
“Transaction Documents” means this
Agreement and each of the agreements, certificates, schedules and instruments to be executed in connection herewith, including the IP
Assignment Agreement (Schedule C), the Clean-Room Attestation (Schedule D), the Bill of Sale (Schedule F), the Ownership
Evidence Pack (Schedule G), and the Certificate of Designation (Schedule H).
2. PURCHASE AND SALE OF THE PURCHASED IP
2.1 Sale and purchase
Subject to the terms and conditions of this Agreement,
Seller hereby sells, transfers, conveys and assigns to Buyer, and Buyer hereby purchases and accepts from Seller, on the Closing Date,
all of Seller’s right, title and interest in and to the Purchased IP, free and clear of all Encumbrances other than those expressly
disclosed in Schedule B.
2.2 Form of conveyance
At Closing, the Parties shall execute the IP Assignment
substantially in the form of Schedule C. To the extent any item of Purchased IP is not assignable in one or more jurisdictions
without further action, Seller shall execute such further instruments and take such further action as Buyer may reasonably request to
perfect the assignment in those jurisdictions, at Buyer’s reasonable cost.
2.3 No assumption of liabilities
Buyer is not assuming and shall not be liable for
any liabilities of Seller, whether known or unknown, arising on or before the Closing Date, other than the obligations expressly set out
in this Agreement.
3. PURCHASE PRICE
3.1 Purchase Price
The aggregate purchase price for the Purchased IP
shall be United States Dollars Six Million (US$6,000,000) (the “Purchase Price”), payable as set out in Clauses
3.2 to 3.4.
3.2 Cash component
Buyer shall pay Seller a cash component of US$50,000
in aggregate (the “Cash Component”), by wire transfer of immediately available funds to the account designated in writing
by Seller, in two tranches:
(a) US$30,000 payable concurrently with the
execution of this Agreement (the “Signature Tranche”); and
(b) US$20,000 payable on the date that is twenty-one
(21) calendar days after the Contract Date (the “Day-21 Tranche”), subject to the Seller’s completion of
delivery of the Purchased IP in accordance with Clause 4.5 and Buyer’s written confirmation that the Delivery conforms to
the requirements of Clause 4.5, such confirmation not to be unreasonably withheld or delayed.
The Cash Component is part of, and not in addition
to, the Purchase Price. Notwithstanding the foregoing, if this Agreement is terminated pursuant to Clause 4.6 by reason of Seller’s
failure to complete Delivery in accordance with Clause 4.5 or by reason of Seller’s material breach of this Agreement, Seller shall
refund to Buyer the entire Cash Component actually paid, by wire transfer of immediately available funds, within five (5) Business Days
of such termination.
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3.3 Common Stock consideration
At Closing, Buyer shall issue and deliver to Seller
(or to such Assignee(s) as Seller may direct in writing pursuant to Clause 13.2) two hundred thousand (200,000) newly-issued,
fully paid and non-assessable shares of Common Stock (the “Consideration Shares”). For purposes of allocating the Purchase
Price, the Consideration Shares are valued at US$10.00 per share, representing an aggregate value of US$2,000,000.
3.4 Series C Preferred consideration
At Closing, Buyer shall issue and deliver to Seller
(or to such Assignee(s) as Seller may direct in writing pursuant to Clause 13.2) three thousand nine hundred fifty (3,950)
newly-issued, fully paid and non-assessable shares of Series C Preferred, par value $0.0001 per share, with a Stated Value of US$1,000
per share (the “Preferred Consideration Shares”), having an aggregate Stated Value of US$3,950,000. The Preferred
Consideration Shares shall have the powers, preferences, rights, qualifications, limitations and restrictions, as set forth in the Certificate
of Designation in the form of Schedule H.
3.5 Exchange Cap
Notwithstanding anything to the contrary in this Agreement,
Buyer shall not issue Common Stock under this Agreement in an amount that, together with any shares aggregable therewith under the rules
of The Nasdaq Stock Market LLC (“Nasdaq”), would exceed 19.99% of the shares of Common Stock outstanding immediately
prior to the Contract Date (the “Exchange Cap”), unless and until Buyer’s stockholders approve such issuance
in accordance with Nasdaq Listing Rules 5635(a) and 5635(d). The Parties acknowledge that the Consideration Shares (200,000 shares) are
expected to be below the Exchange Cap. For the avoidance of doubt, the Preferred Consideration Shares are issued as non-voting, non-convertible
preferred equity at issuance and shall not, at issuance, be counted toward the Exchange Cap or otherwise count toward the share-issuance
approval threshold under Nasdaq Listing Rule 5635(d) or the change-of-control aggregation threshold under Nasdaq Listing Rule 5635(b).
3.6 Allocation
For US federal income tax purposes, the Parties agree
to allocate the Purchase Price among the categories of Purchased IP as set out in Schedule E. Each Party shall file all tax returns
consistent with such allocation, unless required otherwise by applicable law.
3.7 Restricted securities; no registration rights;
leak-out
(a) Seller acknowledges and agrees, for itself and
on behalf of each Assignee, that the Consideration Shares and the Preferred Consideration Shares (i) have not been, and will not be, registered
under the Securities Act or any state securities laws, (ii) are “restricted securities” within the meaning of Rule 144 under
the Securities Act, (iii) will bear customary restrictive legends, and (iv) may not be offered, sold, pledged or otherwise transferred
except pursuant to an effective registration statement or an available exemption from registration. Buyer has no obligation, and has made
no commitment, to register the Consideration Shares or the Preferred Consideration Shares for resale.
(b) Seller shall not, and shall cause each Assignee
not to, offer, sell, contract to sell, pledge, hedge or otherwise dispose of any Consideration Shares (or any interest therein) during
the one hundred eighty (180) days following the Closing Date; and thereafter, on any single trading day, Seller and the Assignees, collectively,
shall not sell Consideration Shares representing more than ten percent (10%) of the average daily trading volume of the Common Stock on
Nasdaq over the ten (10) trading days immediately preceding such date of sale. Any transfer in violation of this Clause 3.7 shall be null
and void, and Buyer may instruct its transfer agent accordingly.
4. CLOSING
4.1 Closing Date and place
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Closing shall occur remotely by exchange of executed
documents and wire confirmations on July 14, 2026 (the “Closing Date”), or such other date as the Parties may
mutually agree in writing.
4.2 Closing deliverables — Seller
At Closing, Seller shall deliver to Buyer:
(a) the executed IP Assignment (Schedule C);
(b) all source code, model weights, training data
sets, documentation, credentials and access tokens in respect of the Purchased IP, transferred via secure repository handover (GitHub
Enterprise or equivalent) to a Buyer-controlled organization;
(c) the executed Clean-Room Attestation (Schedule
D), signed by the engineering lead and the director of Seller (or its build sub-entity);
(d) a written direction (if any) identifying any Assignee(s)
under Clause 13.2 to whom Consideration Shares and/or Preferred Consideration Shares are to be issued; and
(e) a certificate of an authorized officer of Seller
certifying that the representations and warranties of Seller in Clause 6 are true and correct as of the Closing Date.
4.3 Closing deliverables — Buyer
At Closing, Buyer shall deliver to Seller (and, as
applicable, to the Assignee(s)):
(a) the Consideration Shares (200,000 shares
of Common Stock), in book-entry form, registered as directed under Clause 4.2(d);
(b) the Preferred Consideration Shares (3,950
shares of Series C Preferred), in book-entry form (or by physical share certificate if requested by Seller), registered as directed under
Clause 4.2(d), accompanied by a certified copy of the filed Certificate of Designation;
(c) a certificate of an authorized officer of Buyer
certifying that the representations and warranties of Buyer in Clause 7 are true and correct as of the Closing Date; and
(d) certified copies of all corporate authorizations
required to (i) file the Certificate of Designation with the Secretary of State of Nevada, (ii) issue the Consideration Shares, and (iii)
issue the Preferred Consideration Shares.
4.4 Conditions to Closing
Closing is conditional on:
(a) execution and delivery by each Party of all Transaction
Documents;
(b) the filing of the Certificate of Designation
with the Secretary of State of Nevada in the form of Schedule H on or before the Closing Date;
(c) board approval by Buyer of (i) the filing of the
Certificate of Designation, (ii) the issuance of the Consideration Shares, and (iii) the issuance of the Preferred Consideration Shares;
(d) accuracy of the representations and warranties
of each Party in all material respects as of the Closing Date;
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(e) absence of any injunction or order prohibiting
the transactions contemplated hereby;
(f) completion to Buyer’s reasonable satisfaction
of a clean-room verification of the Purchased IP, conducted on or before the Closing Date;
(g) submission by Buyer to Nasdaq of any required
Listing of Additional Shares notification in respect of the Consideration Shares, and the absence of any objection by Nasdaq thereto;
and
(h) completion, to Buyer’s reasonable satisfaction,
of customary sanctions, anti-money-laundering, “know your customer” and lien searches with respect to Seller and each Assignee.
For the avoidance of doubt, the Cash Component (Signature
Tranche) and the Delivery of the Purchased IP are independent of, and shall not be conditional on, the satisfaction of any of the Closing
conditions in this Clause 4.4.
4.5 Delivery of the Purchased IP
Seller shall deliver and transfer the Purchased IP
to Buyer at the Closing Date (such delivery, the “Delivery”). Delivery shall consist of:
(a) execution and exchange of the IP Assignment Agreement
(the standalone instrument set out in Schedule C) and the Bill of Sale (Schedule G);
(b) transfer of all source code, model weights, training
data sets, documentation, credentials and access tokens in respect of the Purchased IP to a Buyer-controlled repository (GitHub Enterprise
or equivalent);
(c) delivery of the executed Clean-Room Attestation
(Schedule D); and
(d) handover of the Ownership Evidence Pack (Schedule
H) sufficient to enable Buyer to record and demonstrate its ownership of the Purchased IP to third parties, including any open-source
license inventory, trademark and domain assignments, and a chain-of-title declaration.
4.6 Termination
This Agreement may be terminated at any time prior
to Closing: (a) by mutual written consent of the Parties; (b) by Buyer, if Seller fails to complete Delivery in accordance with Clause
4.5, or otherwise materially breaches this Agreement, and such failure or breach is not cured within ten (10) Business Days after written
notice from Buyer; or (c) by either Party, if Closing has not occurred on or before August 31, 2026, provided that the right to terminate
under this sub-clause (c) shall not be available to a Party whose breach caused the failure of Closing to occur. Upon termination pursuant
to sub-clause (b), Seller shall refund to Buyer the entire Cash Component actually paid within five (5) Business Days of termination,
and Buyer shall have no obligation to pay any unpaid portion of the Cash Component or to issue any Consideration Shares or Preferred Consideration
Shares. Clauses 8, 9, 10, 11, 12 and 13 shall survive any termination of this Agreement.
5. SELLER’S COVENANTS POST-DELIVERY
5.1 Transition services
For a period of ninety (90) days following
the Delivery Date, Seller shall, at Buyer’s reasonable request, provide reasonable transition assistance to Buyer at no additional
cost, including responding to technical questions, providing knowledge transfer regarding the architecture, deployment, and maintenance
of the Purchased IP, and facilitating Buyer’s onboarding of any successor engineering personnel.
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5.2 Non-competition
For a period of two (2) years following the
Closing Date, Seller shall not directly or indirectly engage in the business of developing, marketing or selling any software product
that is substantially similar to and directly competitive with the Purchased IP in the CTRM market; provided, however, that this Clause
5.2 shall not restrict Seller (or any of its Affiliates) from continuing any business or activity that is unrelated to the CTRM market,
including any trade-finance, fintech, or institutional advisory business of Seller or any of its Affiliates.
5.3 Continued ownership cooperation
Seller shall reasonably cooperate with Buyer, at Buyer’s
reasonable cost, in any future filings, registrations, oppositions or enforcement actions necessary or desirable to maintain or defend
Buyer’s title to the Purchased IP.
6. SELLER’S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer as of the
Contract Date and again as of the Closing Date that:
(a) Seller is duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization;
(b) Seller has full corporate power and authority
to enter into and perform this Agreement;
(c) the execution, delivery and performance of this
Agreement and the other Transaction Documents have been duly authorized by all necessary corporate action of Seller, and this Agreement
has been duly executed and delivered by Seller and constitutes a legal, valid and binding obligation of Seller enforceable in accordance
with its terms;
(d) Seller has good and marketable title to all the
Purchased IP, free and clear of all Encumbrances other than those expressly disclosed in Schedule B;
(e) all material elements of the Purchased IP have
been developed on a clean-room basis as evidenced by the Clean-Room Attestation in Schedule D;
(f) no person other than Seller has any claim, license
or other right with respect to the Purchased IP that would survive the transfer to Buyer under this Agreement;
(g) the Purchased IP does not infringe or misappropriate
the intellectual property rights of any third party;
(h) Seller is acquiring the Consideration Shares and
Preferred Consideration Shares for its own account (or for the account of its Assignees) for investment and not with a view to distribution,
except in compliance with applicable securities laws and Rule 144;
(i) Seller (or each of its Assignees, as applicable)
is an “accredited investor” within the meaning of Rule 501(a) of Regulation D under the Securities Act, or a non-U.S. person
within the meaning of Regulation S, as the case may be;
(j) Seller is not a related party of Buyer within
the meaning of Item 404 of Regulation S-K;
(k) neither Seller, nor any Assignee, nor any of their
respective directors, officers or beneficial owners, is (i) the subject or target of any sanctions administered or enforced by the U.S.
Department of the Treasury’s Office of Foreign Assets Control, the U.S. Department of State, the United Nations Security Council,
the European Union, His Majesty’s Treasury of the United Kingdom, or any other applicable sanctions authority, or (ii) located,
organized or resident in a country or territory that is the subject of comprehensive sanctions, and no portion of the Purchase Price will
be transferred, directly or indirectly, to or for the benefit of any such person;
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(l) Schedule B contains a complete and accurate
inventory of all open-source and other third-party software incorporated in, linked with or distributed with the Purchased IP, and no
portion of the Purchased IP is subject to any license (including any “copyleft” license such as the GPL, LGPL or AGPL) that
would require Buyer to disclose or license any source code, grant any patent license, or otherwise encumber Buyer’s use, modification
or commercial exploitation of the Purchased IP;
(m) each natural person or entity that contributed
to the conception, creation or development of any portion of the Purchased IP has irrevocably assigned to Seller, in writing, all of such
person’s right, title and interest therein, and no such person retains any ownership interest, moral right, royalty entitlement
or other claim with respect to the Purchased IP; and
(n) all data sets included in the Purchased IP (including
all training data sets) were collected, used and processed in compliance with applicable law and all applicable third-party terms of use,
and Seller has, and is transferring to Buyer, all rights necessary for the unrestricted commercial use of such data sets.
7. BUYER’S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller as of the
Contract Date and again as of the Closing Date that:
(a) Buyer is duly organized, validly existing and
in good standing under the laws of the State of Nevada;
(b) Buyer has full corporate power and authority to
enter into and perform this Agreement and to issue the Consideration Shares and the Preferred Consideration Shares;
(c) the execution, delivery and performance of this
Agreement and the other Transaction Documents, including the filing of the Certificate of Designation and the issuance of the Consideration
Shares and the Preferred Consideration Shares, have been duly authorized by all necessary corporate action of Buyer;
(d) the Consideration Shares and the Preferred Consideration
Shares, when issued in accordance with this Agreement, will be duly authorized, validly issued, fully paid and non-assessable, and (other
than as restricted under applicable U.S. federal and state securities laws and Rule 144) free of any Encumbrance;
(e) the Common Stock is listed for trading on the
Nasdaq Capital Market and Buyer is in compliance, or under a Nasdaq-accepted compliance plan, with the applicable continued listing requirements
of Nasdaq;
(f) the issuance of the Consideration Shares and the
Preferred Consideration Shares is exempt from registration under the Securities Act in reliance upon Section 4(a)(2) and/or Rule 506(b)
of Regulation D; and
(g) Buyer is not a related party of Seller within
the meaning of Item 404 of Regulation S-K.
8. INDEMNIFICATION
8.1 Seller’s indemnity
Seller shall indemnify and hold harmless Buyer and
its Affiliates against any losses, damages, costs and expenses (including reasonable attorneys’ fees) arising out of (i) any breach
of Seller’s representations, warranties or covenants in this Agreement, or (ii) any third-party intellectual property claim relating
to the Purchased IP attributable to acts or omissions of Seller on or before the Closing Date.
8.2 Buyer’s indemnity
Buyer shall indemnify and hold harmless Seller and
its Affiliates against any losses, damages, costs and expenses (including reasonable attorneys’ fees) arising out of any breach
of Buyer’s representations, warranties or covenants in this Agreement. Notwithstanding anything to the contrary in this Agreement,
(i) the aggregate liability of Buyer under this Agreement, other than Buyer’s obligation to pay the Cash Component and to issue
the Consideration Shares and the Preferred Consideration Shares in accordance with Clause 3, shall not exceed the portion of the Cash
Component actually paid by Buyer, and (ii) in no event shall Buyer be liable for any indirect, incidental, consequential, special, punitive
or exemplary damages, or for lost profits or diminution in value, arising out of or relating to this Agreement.
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8.3 Basket and cap
Other than for Fundamental Representations
(defined as the representations in Clauses 6(a), 6(b), 6(c), 6(d), 6(j), 7(a), 7(b), 7(c), 7(d), and 7(g)) and Intellectual Property
Representations (defined as the representations in Clauses 6(e), 6(f) and 6(g)), no Party shall be liable under Clauses 8.1 or
8.2 unless and until the aggregate of all losses, damages, costs and expenses incurred by the indemnified Party exceeds US$50,000
(the “Basket”), in which case the indemnified Party shall be entitled to indemnification for the full amount of all
such losses (and not solely the excess over the Basket). The aggregate liability of Seller under Clauses 8.1 or 8.2 shall not exceed
the Purchase Price (the “Cap”); provided, however, that the Basket and Cap shall NOT apply to (x) the Fundamental
Representations of Seller, (y) Intellectual Property Representations, or (z) any indemnity arising from fraud or willful misconduct of
the indemnifying Party.
8.4 Survival
The representations and warranties in Clauses 6
and 7 shall survive Closing for a period of two (2) years (or, in the case of Buyer’s representations and warranties
in Clause 7 other than Fundamental Representations, twelve (12) months), except that (i) Fundamental Representations shall survive indefinitely,
(ii) Intellectual Property Representations shall survive for six (6) years, and (iii) any indemnity for fraud or willful misconduct
shall survive indefinitely.
8.5 Right of set-off
Buyer may set off any amount finally determined (whether
by written agreement of the Parties or pursuant to Clause 11) to be owed by Seller to Buyer under this Agreement against (i) any dividends
payable on the Preferred Consideration Shares and/or (ii) any redemption price payable in respect of the Preferred Consideration Shares.
The good-faith exercise by Buyer of its rights under this Clause 8.5 shall not constitute a breach of this Agreement or an Event of Default
under the Certificate of Designation.
8.6 Exclusive remedy
Except in the case of fraud or willful misconduct,
and except for claims for specific performance or other equitable relief, the indemnification provisions of this Clause 8 shall be the
sole and exclusive remedy of the Parties for any breach of, or claim arising out of, this Agreement.
9. CONFIDENTIALITY AND ANNOUNCEMENTS
9.1 Confidentiality
Each Party shall keep confidential all non-public information of the other
Party received in connection with this Agreement and shall not disclose any such information to any third party except (i) as required
by applicable law (including U.S. federal securities laws and Buyer’s disclosure obligations to the SEC and Nasdaq), (ii) to such
Party’s professional advisors on a need-to-know basis, or (iii) with the other Party’s prior written consent.
9.2 Public announcements
Each Party shall consult with the other before issuing any public announcement
regarding this Agreement, except for any disclosure that Buyer is legally required to make under U.S. federal securities laws (including
the Form 8-K filing referenced in Clause 13.7) or under the rules of Nasdaq.
10. NOTICES
All notices and other communications hereunder shall
be in writing and shall be deemed given when delivered personally, by overnight courier, by certified or registered mail (return receipt
requested), or by email at the addresses set forth below (or such other address as a Party shall designate by written notice to the other):
9
If to Seller:
Litial Ltd
21st Floor, CMA Building, 64 Connaught Road Central
Hong Kong
Attention: Authorised Signatory
Email: Yash@litial.net
If to Buyer:
Sadot Group Inc.
295 E Renfro Street, Suite 300
Burleson, Texas 76028
United States
Attention: Chief Executive Officer
Email: [Chagay’s working email — to be
confirmed]
With a copy (which shall not constitute notice) to:
Fleming PLLC
30 Wall Street, 8th Floor
New York, New York 10005
11. GOVERNING LAW AND DISPUTE RESOLUTION
11.1 Governing law
This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to its conflict-of-laws principles.
11.2 Arbitration
Any dispute, controversy or claim arising out of or
in connection with this Agreement shall be referred to and finally resolved by arbitration under the International Arbitration Rules
of the International Centre for Dispute Resolution (ICDR), by a sole arbitrator appointed in accordance with the said Rules. The seat
of arbitration shall be London, England. The language of the arbitration shall be English.
11.3 Provisional remedies
Notwithstanding Clause 11.2, either Party may
apply to any court of competent jurisdiction for interim or conservatory measures.
12. TAX
Each Party shall be responsible for its own tax liabilities
arising from this Agreement. The Parties agree to allocate the Purchase Price for US federal income tax purposes as set out in Schedule
E and to file all relevant tax returns consistent with such allocation. Litial acknowledges that the offshore-source treatment of
the Purchase Price under Hong Kong’s Inland Revenue Ordinance is the responsibility of Seller and is to be confirmed by Seller’s
Hong Kong tax counsel.
13. MISCELLANEOUS
13.1 Entire agreement
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This Agreement, together with the other Transaction
Documents, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior and
contemporaneous understandings and agreements, whether written or oral.
13.2 Assignment by Seller
Seller may, on or before the Closing Date, by written
notice to Buyer, direct Buyer to issue all or any portion of the Consideration Shares and/or Preferred Consideration Shares to one or
more designated assignees (each, an “Assignee”), provided that each Assignee delivers to Buyer the customary “accredited
investor” or “non-U.S. person” representations required under applicable U.S. federal and state securities laws, and
provided further that (i) there shall be no more than five (5) Assignees in the aggregate, (ii) each Assignee executes and delivers to
Buyer a joinder to this Agreement, in form reasonably satisfactory to Buyer, agreeing to be bound by the transfer restrictions in Clause
3.7, and (iii) Buyer shall not be obligated to issue any Consideration Shares or Preferred Consideration Shares to any proposed Assignee
that does not clear Buyer’s customary sanctions, anti-money-laundering and “know your customer” screening. Any such
Assignee shall be deemed to have the benefit of, and to be bound by, the relevant provisions of this Agreement applicable to Seller in
its capacity as a recipient of the Consideration Shares or Preferred Consideration Shares.
13.3 No assignment by Buyer
Buyer may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of Seller, except that Buyer may, without such consent, assign this
Agreement to an Affiliate of Buyer or to a successor in interest in connection with a merger, consolidation, reorganization or sale of
all or substantially all of Buyer’s assets, provided that no such assignment shall relieve Buyer of its obligations hereunder.
13.4 Amendment
This Agreement may be amended only by a written instrument
signed by both Parties.
13.5 Waiver
A waiver of any breach of this Agreement shall not
be deemed a waiver of any other or subsequent breach.
13.6 Severability
If any provision of this Agreement is held to be invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not be affected or impaired thereby.
13.7 SEC filing acknowledgement
Seller acknowledges that Buyer is required to file
a Current Report on Form 8-K with the U.S. Securities and Exchange Commission within four (4) Business Days of the Contract Date disclosing
this Agreement and the material terms hereof, including the issuance of the Series C Preferred and the filing of the Certificate of Designation,
and Seller consents to such disclosure.
13.8 Counterparts; electronic signature
This Agreement may be executed in counterparts (including
by electronic signature, scanned PDF, or DocuSign), each of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
13.9 Headings
The headings of the various sections of this Agreement
are for convenience of reference only and shall not affect the interpretation of any of the provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the Parties have caused
this Agreement to be executed by their duly authorized representatives as of the Contract Date.
LITIAL LTD
By: /s/ Maurve Sachin Shah
Name: Maurve Sachin Shah
Title: Director
Email: Yash@litial.net
Date: July 14, 2026
SADOT GROUP INC.
By: /s/ Chagay Ravid
Name: Chagay Ravid
Title: Chief Executive Officer
Date: July 14, 2026
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SCHEDULES
Schedule
Description
A
The Purchased IP — full inventory (source code repositories, model weights, training data sets, documentation, “TradeIQ” name, logos, domains, etc.)
B
Disclosed Encumbrances (open-source dependencies, license inventory, third-party tools)
C
Form of IP Assignment Agreement (standalone instrument)
D
Clean-Room Attestation
E
Purchase Price Allocation (US federal income tax)
F
Bill of Sale
G
Ownership Evidence Pack (chain-of-title, patent/trademark filings, open-source inventory)
H
Form of Certificate of Designation, Preferences, Rights and Limitations of Series C Non-Voting Non-Convertible Preferred Stock of Sadot Group Inc.
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EX-10.2 — EXHIBIT 10.2
EX-10.2
Filename: e7788_ex10-2.htm · Sequence: 6
EXHIBIT 10.2
SECURITIES PURCHASE
AGREEMENT
This SECURITIES PURCHASE AGREEMENT
(the “Agreement”), dated as of July 16, 2026, is by and among Sadot Group Inc., a Nevada corporation with offices located
at 295 E. Renfro Street, Suite 300, Burleson, Texas 76028 (the “Company”), and each of the investors listed on the
Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).
RECITALS
A. The
Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation D (“Regulation D”)
as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the 1933 Act.
B. The
Company has authorized the issuance of a new series of senior secured convertible notes of the Company, in the aggregate original principal
amount of up to $100,000,000, substantially in the form attached hereto as Exhibit A (the “Notes”), which
Notes shall be convertible into shares of Common Stock (as defined below), in accordance with the terms of the Notes.
C. Each
Buyer wishes to purchase, and the Company wishes to sell (i) at the Initial Closing (as defined below), upon the terms and conditions
stated in this Agreement, a Note in the aggregate original principal amount set forth opposite such Buyer’s name in column (3) on
the Schedule of Buyers (which aggregate principal amount for all Buyers shall not exceed $4,000,000) (each, an “Initial Note”,
and collectively, the “Initial Notes”)(the shares of Common Stock issuable pursuant to the terms of the Initial Notes,
including, without limitation, upon conversion or otherwise, collectively, the “Initial Conversion Shares”) and (ii)
at the Second Closing (as defined below), a Note in the aggregate original principal amount set forth opposite such Buyer’s name
in column (4) on the Schedule of Buyers (which aggregate principal amount for all Buyers shall not exceed $1,000,000) (each, a “Second
Note,” and collectively, the “Second Notes”)(the shares of Common Stock issuable pursuant to the terms of
the Second Notes, including, without limitation, upon conversion or otherwise, collectively, the “Second Conversion Shares”).
D. Subject
to the terms and conditions set forth in this Agreement, the Company may require each Buyer and each Buyer may require the Company to
participate in one or more Additional Closings (as defined below) for the purchase by each such applicable Buyer, and the sale by the
Company of a Note in an original principal amount of set forth in the applicable Additional Closing Notice (as defined below) (each Note
to be sold at an Additional Closing, an “Additional Note”, and collectively, the “Additional Notes”)(the
shares of Common Stock issuable pursuant to the terms of the Additional Notes, including, without limitation, upon conversion or otherwise,
collectively, the “Additional Conversion Shares”, and collectively with the Initial Conversion Shares and the Second
Conversion Shares, the “Conversion Shares”); provided, that the aggregate principal amount of Additional Notes to be
sold to the Buyers at any Additional Closing, shall not exceed $95,000,000, in the aggregate, for all Buyers at all Additional Closings.
E. At
the Initial Closing, the parties hereto shall execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit
B (the “Registration Rights Agreement”), pursuant to which the Company has agreed to provide certain registration
rights with respect to the Registrable Securities (as defined in the Registration Rights Agreement), under the 1933 Act and the rules
and regulations promulgated thereunder, and applicable state securities laws.
F. The
Notes and the Conversion Shares are collectively referred to herein as the “Securities.”
G. The
Notes shall rank pari passu with each other and senior to all other outstanding and future Indebtedness of the Company and its
Subsidiaries other than Permitted Indebtedness (as defined in the Notes) secured by Permitted Liens (as defined in the Notes) and will
be secured by all of the Company’s right, title and interest in, to and under all personal property and assets of the Company acquired
using the proceeds of the Purchase Price of the Notes (or otherwise acquired using the proceeds of Collateral (as defined in the Security
Agreement), wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind, nature
and description, whether tangible or intangible, as evidenced by (i) a security agreement in the form attached hereto as Exhibit
C (the “Security Agreement”, and together with the Perfection Certificate (as defined below), all other security
documents and agreements entered into in connection with this Agreement and each of such other documents and agreements, as each may be
amended or modified from time to time, collectively, the “Security Documents”), and (ii) a guaranty executed by each
Subsidiary of the Company (each, a “Guarantor”), in the form attached hereto as Exhibit D (collectively,
the “Guaranties”) pursuant to which each of them guarantees the obligations of the Company under the Transaction Documents
(as defined below).
AGREEMENT
NOW, THEREFORE, in consideration
of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each Buyer hereby agree as follows:
1. PURCHASE
AND SALE OF NOTES.
(a) Purchase
of Notes.
(i) Initial
Closing. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6(a) and 7(a) below, the Company shall issue
and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Initial Closing Date (as defined
below), an Initial Note in the original principal amount as is set forth opposite such Buyer’s name in column (3) on the Schedule
of Buyers (the “Initial Closing”).
(ii) Second
Closing. Subject to the satisfaction (or wavier) of the conditions set forth in Sections 1(b)(ii), 6(b) and 7(b) below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Second Closing Date
(as defined below), a Second Note in the original principal amount as is set forth opposite such Buyer’s name in column (4) on the
Schedule of Buyers (the “Second Closing”).
(iii) Additional
Closing. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 1(b)(iii), 6(c) and 7(c) below, the Company
shall issue and sell to such Buyer, and such Buyer severally, but not jointly, with any other Buyer, shall purchase from the Company,
on the applicable Additional Closing Date (as defined below), such aggregate principal amount of Additional Notes as is set forth in such
applicable Additional Closing Notice (each such closing of the purchase of such Additional Notes, each, an “Additional Closing”).
(b) Closing.
The Initial Closing, the Second Closing and the Additional Closing are each referred to in this Agreement as a “Closing”.
Each Closing shall occur at the offices of Sullivan & Worcester LLP, 1251 Avenue of the Americas, New York, NY 10020 or such other
location as the parties hereto shall mutually agree take place or remotely by electronic transfer of the documentation required for each
Closing.
(i) Initial
Closing. The date and time of the Initial Closing (the “Initial Closing Date”) shall be 10:00 a.m., New York time,
on the first (1st) Business Day (as defined below) on which the conditions to the Initial Closing set forth in Sections 6(a) and 7(a)
below are satisfied or waived (or such other date as is mutually agreed to by the Company and each Buyer). As used herein “Business
Day” means any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, that, for clarification, commercial banks shall not be deemed to be authorized
or required by law to remain closed due to “stay at home”, “shelter-in-place”, “non-essential employee”
or any other similar orders or restrictions or the closure of any physical branch locations at the direction of any governmental authority
so long as the electronic funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally
are open for use by customers on such day.
2
(ii) Second
Closing. Subject to the completion of the Initial Closing, the date and time of the Second Closing (the “Second Closing Date”)
shall be 10:00 a.m., New York time, on the first (1st) Business Day following (i) the Stockholder Approval Date (as defined below), and
(ii) the Effective Date (as defined in the Registration Rights Agreement) (collectively, the “Second Closing Trigger Events”).
Upon the occurrence of the Second Closing Trigger Events, the Company shall provide written notice to the Buyers that the Second Closing
Trigger Events have occurred and the Buyers shall be bound to deliver the Second Purchase Price to the Company on the Second Closing Date,
unless (A) an Event of Default has occurred or the Company has breached its representations, warranties or covenants of any Transaction
Document (regardless whether such Event of Default or breach has been cured) or (B) the Company has received any notification, written
or oral, from the Principal Market that the Company is in non-compliance with the continued listing requirements of the Principal Market.
(iii) Additional
Closing Dates. Subject to completion of the Initial Closing and the Second Closing, if the Company has delivered an Additional Mandatory
Closing Notice to each of the Buyers, the date and time of the applicable Additional Closing (each, an “Additional Closing Date,”
and the Initial Closing Date, the Second Closing Date and each Additional Closing Date, each, a “Closing Date”) shall
be 10:00 a.m., New York time, on the first (1st) Business Day on which the conditions to such Additional Closing set forth in this Section
1(b)(iii) Error! Reference source not found.and Sections 6(c) and 7(c) below are satisfied or waived (or such other date as is
mutually agreed to by the Company and each Buyer).
(1) Additional
Closings at Buyer’s Election. Subject to the satisfaction (or waiver) of the conditions to closing set forth in this Section
1(b)(iii) and Sections 6(c) and 7(c) below (the “Additional Closing Conditions”), each Buyer, severally, shall have
the right, exercisable by e-mail delivery of a written notice to the Company (each, an “Additional Optional Closing Notice”)
to purchase, and to require the Company to sell to such Buyer, at one or more Additional Closings (such Additional Closing, each, an “Additional
Optional Closing”), up to such maximum aggregate principal amount of $95,000,000 Additional Notes (subject to reduction, on
a dollar-for-dollar basis for the aggregate principal amount of any Additional Notes issued in any Additional Closing on or prior to such
Additional Closing Date, if any)(each, an “Additional Optional Closing Maximum Amount”) for all Additional Closings.
Each Additional Optional Closing Notice shall specify (x) the proposed date and time of the applicable Additional Closing (which, if unspecified
in such Additional Optional Closing Notice, shall be the fifth (5th) Trading Day after such Additional Optional Closing Notice or such
other date as is mutually agreed to by the Company and each Buyer) and (y) the aggregate principal amount of Additional Notes to be purchased
by each Buyer at such applicable Additional Optional Closing, which shall not exceed the Additional Optional Closing Maximum Amount of
such applicable Buyer (or such other amount as the Company and such Buyer shall mutually agree)(such aggregate principal amount of Additional
Notes set forth in such Additional Optional Closing Notice to be purchased by such Buyer, each, an “Additional Optional Note
Amount”). If a Buyer provides an Additional Optional Closing Notice to the Company, the Company shall be required to file a
Registration Statement (as defined in the Registration Rights Agreement) to register the resale of the Conversion Shares underlying such
Additional Notes issued for such Additional Option Closing (if not previously so registered under the Registration Rights Agreement),
and such Buyer shall not be required to deliver the Additional Purchase Price for such Additional Notes to the Company until the Registration
Statement registering the resale of the Conversion Shares underlying such Additional Notes has been (or previously had been) declared
effective by the SEC. The Buyers’ rights to effect any Additional Optional Closings hereunder shall terminate on the five (5) year
anniversary of the Initial Closing Date (or such earlier date as the Buyers shall determine, in their sole discretion, by delivery of
a written notice to the Company) (the “Additional Closing Expiration Date”).
3
(2) Additional
Mandatory Closing at Company’s Election. Subject to the satisfaction (or waiver) of the Additional Closing Conditions, at any
time after the later of the thirtieth (30th) Trading Day (as defined in the Notes) following (i) the immediately prior Closing,
and (ii) the Effective Date of the Registration Statement registering the resale of the Registrable Securities for such applicable Closing,
immediately prior to such date of determination, if on each Trading Day during the thirty (30) Trading Days immediately prior to such
date of determination: (i) no more than $1.0 million in aggregate principal amount of Notes remain outstanding, (ii) the daily VWAP (as
defined in the Notes) of the Common Stock is not less than $10.00, (iii) no Equity Conditions Failure (as defined in the Notes) then exists,
(iv) the aggregate daily dollar trading volume (as reported on the Reporting Service (as defined in the Notes)) of the Common stock on
the Principal Market is at least $2,000,000 and (v) the Company is in compliance with the continued listing requirements of the Principal
Market, including the stockholders’ equity requirement pursuant to Nasdaq Listing Rule 5550(b)(1), or has cured any deficiencies
of the continued listing requirements of the Principal Market of which the Company has been notified by the Principal Market, the Company
shall have the right to require each Buyer to purchase at such applicable Additional Closing up to a maximum aggregate principal amount
of $2,000,000 of Additional Notes as set forth opposite such Buyer’s name in column (5) of the Schedule of Buyers at any such Additional
Closing (but in no event greater, for all Additional Closings, than such maximum aggregate principal amount of Additional Notes as set
forth opposite such Buyer’s name in column (6) of the Schedule of Buyers (subject to reduction, on a dollar-for-dollar basis for
the aggregate principal amount of any Additional Notes issued in any Additional Optional Closing on or prior to such Additional Closing
Date, if any)(as applicable, each, an “Additional Mandatory Closing Maximum Amount”), by delivering a written notice
by e-mail and overnight courier to each Buyer (each, an “Additional Mandatory Closing Notice”, and together with the
Additional Optional Closing Notices, each an “Additional Closing Notice”, and the date of an applicable Additional
Mandatory Closing Notice, each an “Additional Mandatory Closing Notice Date”) at one or more Additional Closings (such
Additional Closing, each, an “Additional Mandatory Closing”). Notwithstanding the foregoing, any Trading Day period
above shall be extended by the number of Trading Days during such period and any extension thereof contemplated by this proviso on which
any Buyer is restricted from trading due to such Buyer’s possession of material non-public information of the Company and/or any
of its Subsidiaries. Each Additional Mandatory Closing Notice shall be irrevocable. Each Additional Mandatory Closing Notice shall (A)
certify that no Event of Default then exists and, other than with respect to deliverables to be delivered to each Buyer at such Additional
Mandatory Closing, all the conditions to closing set forth in this Section 1(b)(iii) and Sections 6(c) and 7(c) below have been satisfied
in full as of such applicable Additional Mandatory Closing Notice Date, (B) specify the proposed date of such Additional Mandatory Closing
(which shall be no less than two (2) Business Days nor more than twenty (20) Business Days after such Additional Mandatory Closing Notice
Date, subject to the right of each Buyer, by written notice to the Company, to accelerate such applicable Additional Closing Date to an
earlier date, not less than one (1) Trading Day after such applicable Additional Mandatory Closing Notice Date (or such other date as
such Buyer and the Company shall mutually agree)) and (C) specify the aggregate principal amount of Additional Notes to be purchased by
each Buyer at such applicable Additional Mandatory Closing, which shall not exceed the individual or aggregate, as applicable, Additional
Mandatory Closing Maximum Amount of such applicable Buyer (or such other amount as the Company and such Buyer shall mutually agree) (such
aggregate principal amount of Additional Notes set forth in such Additional Mandatory Closing Notice to be purchased by such Buyer, each,
an “Additional Mandatory Note Amount”). For the avoidance of doubt, the Company shall not be entitled to effect an
Additional Mandatory Closing if on such applicable Additional Mandatory Closing Date there is an Event of Default or if the Company fails
to satisfy any of the other conditions to closing herein (unless waived in writing by the applicable Buyer participating in such Additional
Mandatory Closing). The Company’s rights to effect any Additional Closings hereunder shall terminate upon the Additional Closing
Expiration Date.
4
(c) Purchase
Price. The aggregate purchase price for the Initial Notes to be purchased by each Buyer (the “Initial Purchase Price”)
shall be the amount set forth opposite such Buyer’s name in column (7) on the Schedule of Buyers. The aggregate purchase price for
the Second Notes to be purchased by each Buyer (the “Second Purchase Price”) shall be the amount set forth opposite
such Buyer’s name in column (8) on the Schedule of Buyers. The aggregate purchase price of the Additional Notes to be purchased
by each Buyer (the “Additional Purchase Price” and together with the Initial Purchase Price and the Second Purchase
Price, each, a “Purchase Price”) shall be $900 for each $1,000 of principal amount of Additional Notes to be purchased
by such Buyer at each Additional Closing.
(d) Form
of Payment.
(i) On
the Initial Closing Date, (A) each Buyer shall pay its respective Initial Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(g)) to the Company for the Initial Notes to be issued and sold to such Buyer at the Initial Closing,
by wire transfer of immediately available funds in accordance with the Initial Flow of Funds Letter (as defined below) and (B) the
Company shall deliver to each Buyer an Initial Note in the aggregate original principal amount as is set forth opposite such Buyer’s
name in column (3) of the Schedule of Buyers, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
(ii) On
the Second Closing Date, (A) each Buyer shall pay its respective Second Purchase Price (less, in the case of any Buyer, the amounts withheld
pursuant to Section 4(g)) to the Company for the Second Notes to be issued and sold to such Buyer at the Second Closing, by wire
transfer of immediately available funds in accordance with the Second Flow of Funds Letter (as defined below) and (B) the Company
shall deliver to each Buyer a Second Note in the aggregate original principal amount as is set forth opposite such Buyer’s name
in column (4) of the Schedule of Buyers, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
(iii) On
each Additional Closing Date, (A) each Buyer participating in such Additional Closing shall pay its respective applicable Additional Purchase
Price for such Additional Closing (less, in the case of any Buyer, the amounts withheld pursuant Section 4(g)) to the Company for the
Additional Notes to be issued and sold to such Buyer at such Additional Closing, by wire transfer of immediately available funds in accordance
with the applicable Additional Flow of Funds Letter (as defined below) and (B) the Company shall deliver to each such applicable Buyer
an Additional Note not to exceed the aggregate original principal amount set forth in the applicable Additional Closing Notice to be issued
to such Buyer, duly executed on behalf of the Company and registered in the name of such Buyer or its designee.
(e) Rank.
Each party hereto acknowledges that the Initial Notes, the Second Notes and the Additional Notes shall be part of a single series of notes
and shall rank pari passu with each other and senior to all other outstanding and future Indebtedness of the Company, and its Subsidiaries
other than Permitted Indebtedness (as defined in the Notes) secured by Permitted Liens (as defined in the Notes).
2. BUYER’S
REPRESENTATIONS AND WARRANTIES.
Each Buyer, severally and not jointly,
represents and warrants to the Company with respect to only itself that, as of the date hereof and as of each Closing Date on which such
Buyer purchases any Notes hereunder:
(a) Organization;
Authority. Such Buyer is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its
organization with the requisite power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents
(as defined below) to which it is a party and otherwise to carry out its obligations hereunder and thereunder.
5
(b) No
Public Sale or Distribution. Such Buyer (i) is acquiring its Notes, and (ii) upon conversion of its Notes will acquire the Conversion
Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with,
the public sale or distribution thereof in violation of applicable securities laws, except pursuant to sales registered or exempted under
the 1933 Act; provided, however, by making the representations herein, such Buyer does not agree, or make any representation or warranty,
to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in
accordance with or pursuant to a registration statement or an exemption from registration under the 1933 Act. Such Buyer does not presently
have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable
securities laws. For purposes of this Agreement, “Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity (as defined below)
or any department or agency thereof.
(c) Accredited
Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D. Such Buyer
hereby represents that neither such Buyer nor any of its Rule 506(d) Related Parties is a “bad actor” within the meaning of
Rule 506(d) promulgated under the 1933 Act. For purposes of this Agreement, “Rule 506(d) Related Party” shall mean a person
or entity covered by the “Bad Actor disqualification” provision of Rule 506(d) of the 1933 Act.
(d) Reliance
on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions from
the registration requirements of United States federal and state securities laws and that the Company is relying in part upon the truth
and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings
of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of such Buyer to acquire
the Securities.(e) Information. Such Buyer and its advisors, if any, have been furnished with all materials
relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities that
have been requested by such Buyer. Such Buyer and its advisors, if any, have been afforded the opportunity to ask questions of the Company.
Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives
shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained herein.
Such Buyer understands that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal
and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.
(f) No
Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the
Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.
(g) Transfer
or Resale. Such Buyer understands that except as provided in the Registration Rights Agreement and Section 4(h) hereof: (i) the Securities
have not been and are not being registered under the 1933 Act or any state securities laws, and may not be offered for sale, sold, assigned
or transferred unless (A) subsequently registered thereunder, (B) such Buyer shall have delivered to the Company (if requested by the
Company) an opinion of counsel, in a form reasonably acceptable to the Company, to the effect that such Securities to be sold, assigned
or transferred may be sold, assigned or transferred pursuant to an exemption from such registration, or (C) such Buyer provides the Company
with reasonable assurance that such Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A promulgated under
the 1933 Act (or a successor rule thereto) (collectively, “Rule 144”); (ii) any sale of the Securities made in reliance
on Rule 144 may be made only in accordance with the terms of Rule 144, and further, if Rule 144 is not applicable, any resale of the Securities
under circumstances in which the seller (or the Person through whom the sale is made) may be deemed to be an underwriter (as that term
is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC
promulgated thereunder; and (iii) neither the Company nor any other Person is under any obligation to register the Securities under the
1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing,
the Securities may be pledged in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities
and such pledge of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting
a pledge of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company
pursuant to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section
2(g).
6
(h) Validity;
Enforcement. The Transaction Documents to which such Buyer is a party have been duly and validly authorized, executed and delivered
on behalf of such Buyer and shall constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in
accordance with their respective terms, except as such enforceability may be limited by general principles of equity or to applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement
of applicable creditors’ rights and remedies.
(i) No
Conflicts. The execution, delivery and performance by such Buyer of the Transaction Documents to which such Buyer is a party and
the consummation by such Buyer of the transactions contemplated hereby and thereby will not (i) result in a violation of the organizational
documents of such Buyer, or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture
or instrument to which such Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such
conflicts, defaults, rights or violations which could not, individually or in the aggregate, reasonably be expected to have a material
adverse effect on the ability of such Buyer to perform its obligations hereunder.(j) Residency. Such
Buyer is a resident of that jurisdiction specified below its address on the Schedule of Buyers.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
Except where specifically set forth
below with respect to certain specified representations and warranties or in a disclosure schedule delivered by the Company to the Buyers
concurrently with this Agreement, which is hereby incorporated by reference in, and constitutes an integral part of, this Agreement (the
“Disclosure Schedules”), the Company represents and warrants to each of the Buyers that, as of the date hereof and
as of each Closing Date:
(a) Organization
and Qualification. Each of the Company and each of its Subsidiaries are entities duly organized or incorporated, as applicable, and
validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisite power and authority
to own their properties and to carry on their business as now being conducted and as presently proposed to be conducted. Each of the Company
and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in good standing in every jurisdiction in which
its ownership of property or the nature of the business conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not reasonably be expected to have a Material Adverse Effect (as defined below).
As used in this Agreement, “Material Adverse Effect” means any material adverse effect on (i) the business, properties,
assets, liabilities, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary
(as defined below), individually or taken as a whole, (ii) the transactions contemplated hereby or in any of the other Transaction Documents
or any other agreements or instruments to be entered into in connection herewith or therewith or (iii) the authority or ability of the
Company or any of its Subsidiaries to perform any of their respective obligations under any of the Transaction Documents (as defined below).
Other than the Persons (as defined below) set forth in the SEC Reports, the Company has no Subsidiaries, except those to be formed in
the ordinary course of business after the date of this Agreement. “Subsidiaries” means any Person in which the Company,
directly or indirectly, (I) owns any of the outstanding share capital or holds any equity or similar interest of such Person or (II) controls
or operates all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred
to herein as a “Subsidiary.”
(b) Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this Agreement
and the other Transaction Documents and to issue the Securities in accordance with the terms hereof and thereof. Each Subsidiary has the
requisite power and authority to enter into and perform its obligations under the Transaction Documents to which it is a party. The execution
and delivery of this Agreement and the other Transaction Documents by the Company and its Subsidiaries, and the consummation by the Company
and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and
the reservation for issuance and issuance of the Conversion Shares issuable upon conversion of the Notes) have been duly authorized by
the Company’s board of directors and each of its Subsidiaries’ respective board of directors or other governing body, as applicable,
and other than (i) the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration
Rights Agreement, (ii) a Form D with the SEC, (iii) with respect to the Second Closing and any Additional Closing and/or conversion of
the Second Notes or Additional Notes,
7
confirmation that Stockholder Approval has been obtained, (iv) with respect to the Initial Closing
and/or conversion of the Notes, the filing of an Additional Listing Application with the Principal Market, and (v) any other filings as
may be required by any state securities agencies, no further filing, consent or authorization is required by the Company, its Subsidiaries,
their respective boards of directors or their shareholders or other governing body. This Agreement has been, and the other Transaction
Documents to which it is a party will be prior to the Initial Closing, duly executed and delivered by the Company, and each constitutes
the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its respective terms, except
as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and
except as rights to indemnification and to contribution may be limited by federal or state securities law. Prior to the Initial Closing,
the Transaction Documents to which each Subsidiary is a party will be duly executed and delivered by each such Subsidiary, and shall constitute
the legal, valid and binding obligations of each such Subsidiary, enforceable against each such Subsidiary in accordance with their respective
terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and
remedies and except as rights to indemnification and to contribution may be limited by federal or state securities law. “Transaction
Documents” means, collectively, this Agreement, the Notes, the Guaranties, the Security Documents, the Registration Rights Agreement,
the Irrevocable Transfer Agent Instructions (as defined below) and each of the other agreements and instruments entered into or delivered
by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be amended from time to time.
(c) Issuance
of Securities. The issuance of the Securities have been duly authorized and upon issuance in
accordance with the terms of the Transaction Documents, (i) each Initial Note, each Second Note and each Additional Note will be when
issued at a Closing validly executed, authenticated, issued, sold, and delivered and will constitute the legal, valid, and binding obligations
of the Company, and (ii) the Conversion Shares shall be validly issued, fully paid and non-assessable and free from
all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security
interests and other encumbrances (collectively “Liens”) with respect to the issuance thereof. As of each Closing,
subject to the Company obtaining Stockholder Approval and filing an amendment to its Articles of Incorporation to increase its authorized
shares of Common Stock, the Company shall have reserved from its duly authorized capital stock not less than the maximum number of Conversion
Shares issuable upon conversion of the Notes (assuming for purposes hereof that (i) all Second Notes and Additional Notes issuable hereunder
shall have been issued at a Second Closing and an Additional Closing on the Initial Closing Date, (ii) the Notes are convertible at the
Floor Price (as defined in the Notes), (iii) interest on the Notes shall accrue upon the issuance thereof through the second anniversary
of the Initial Closing Date and will be paid in shares of Common Stock at a price equal to the Floor Price and (iv) any such conversion
or payment shall not take into account any limitations thereon set forth in the Notes). Upon issuance or conversion or payment in accordance
with the terms of the Notes, the Conversion Shares, when issued, will be validly issued, fully paid and nonassessable and free from all
preemptive or similar rights or Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder
of shares of Common Stock. Subject to the accuracy of the representations and warranties of the Buyers in this Agreement, the offer and
issuance by the Company of the Securities is exempt from registration under the 1933 Act.
(d) No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and its Subsidiaries and the consummation
by the Company and its Subsidiaries of the transactions contemplated hereby and thereby (including, without limitation, the issuance of
the Notes and the reservation for issuance of the Conversion Shares) will not (i) result in a violation of the Company’s Articles
of Incorporation, as amended (the “Articles of Incorporation”), as may be amended from time to time, of the Company,
or the certificate of formation, memorandum of association, articles of association, bylaws or other organizational documents of the Company
or any of its Subsidiaries, or any capital stock or other securities of the Company or any of its Subsidiaries, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a default) in any respect under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company
or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including,
without limitation, foreign, federal and state securities laws and regulations and the rules and regulations of the Nasdaq Capital Market
(the “Principal Market”) and including all applicable foreign, federal and state laws, rules and regulations applicable
to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected).
8
(e) Consents.
Neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing or registration
with (other than the filing with the SEC of one or more Registration Statements in accordance with the requirements of the Registration
Rights Agreement, the filing of a Listing of Additional Shares application with the Principal Market, a Form D with the SEC and any other
filings as may be required by any state securities agencies), any Governmental Entity (as defined below) or any regulatory or self-regulatory
agency or any other Person in order for it to execute, deliver or perform any of its respective obligations under or contemplated by the
Transaction Documents, in each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and
registrations which the Company or any Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained
or effected on or prior to the applicable Closing Date, and neither the Company nor any of its Subsidiaries are aware of any facts or
circumstances which might prevent the Company or any of its Subsidiaries from obtaining or effecting any of the registration, application
or filings contemplated by the Transaction Documents. Except as disclosed on Schedule 3(n), the Company is not in violation of
the requirements of the Principal Market and the Company has no knowledge of any facts or circumstances which could reasonably lead to
delisting or suspension of the Common Stock in the foreseeable future. “Governmental Entity” means any nation, state,
county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local, municipal, foreign, or other
government, governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department, official,
or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing,
including any entity or enterprise owned or controlled by a government or a public international organization or any of the foregoing.
(f) Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the capacity
of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby and
that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate” (as defined in
Rule 144) of the Company or any of its Subsidiaries or (iii) to its knowledge, a “beneficial owner” of more than 10% of the
shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the “1934 Act”)).
The Company further acknowledges that no Buyer is acting as a financial advisor or fiduciary of the Company or any of its Subsidiaries
(or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby, and any advice
given by a Buyer or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated
hereby and thereby is merely incidental to such Buyer’s purchase of the Securities. The Company further represents to each Buyer
that the Company’s and each Subsidiary’s decision to enter into the Transaction Documents to which it is a party has been
based solely on the independent evaluation by the Company, each Subsidiary and their respective representatives.
(g) No
General Solicitation. Neither the Company, nor any of its Subsidiaries or affiliates, nor any Person acting on its or their behalf,
has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer
or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees,
or brokers’ commissions (other than for Persons engaged by any Buyer or its investment advisor) relating to or arising out of the
transactions contemplated hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including,
without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such claim.
(h) No
Integrated Offering. None of the Company, its Subsidiaries or any of their affiliates, nor any Person acting on their behalf has,
directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that
would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior offerings
or otherwise, or caused this offering of the Securities to require approval of shareholders of the Company for purposes of the 1933 Act
or under any applicable shareholder approval provisions, including, without limitation, under the rules and regulations of any exchange
or automated quotation system on which any of the securities of the Company are listed or designated for quotation. None of the Company,
its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps that would require registration
of the issuance of any of the Securities under the 1933 Act (other than pursuant to the Registration Rights Agreement) or cause the offering
of any of the Securities to be integrated with other offerings of securities of the Company.
9
(i) Dilutive
Effect. The Company understands and acknowledges that the number of Conversion Shares will increase in certain circumstances. The
Company further acknowledges that its obligation to issue the Conversion Shares pursuant to the terms of the Notes in accordance with
this Agreement and to issue the Notes in accordance with this Agreement, is, in each case, absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
(j) Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any, in order
to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including, without limitation,
any distribution under a rights agreement), shareholder rights plan or other similar anti-takeover provision under the Articles of Incorporation
or the laws of the jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as a result of the
transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Securities and any Buyer’s
ownership of the Securities. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable
any shareholder rights plan or similar arrangement relating to accumulations of beneficial ownership of shares of Common Stock or a change
in control of the Company or any of its Subsidiaries.
(k) SEC
Documents; Financial Statements. During the two (2) years prior to the date hereof, except for the late filing of the Company’s
Annual Report on Form 10-K for the year ended December 31, 2025, the Company has timely filed all reports, schedules, forms, proxy statements,
statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the 1934 Act (all of
the foregoing filed prior to the date hereof and all exhibits and appendices included therein and financial statements, notes and schedules
thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The
Company has delivered or has made available to the Buyers or their respective representatives true, correct and complete copies of each
of the SEC Documents not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respects
with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the SEC
Documents complied in all material respects with applicable accounting requirements and the published rules and regulations of the SEC
with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted
accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position of the Company
as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments which will not be material, either individually or in the aggregate). The reserves, if
any, established by the Company or the lack of reserves, if applicable, are reasonable based upon facts and circumstances known by the
Company on the date hereof and there are no loss contingencies that are required to be accrued by the Statement of Financial Accounting
Standard No. 5 of the Financial Accounting Standards Board which are not provided for by the Company in its financial statements or otherwise.
No other information provided by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents (including,
without limitation, information referred to in Section 2(e) of this Agreement or in the Disclosure Schedules to this Agreement) contains
any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein not misleading,
in light of the circumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of
the financial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respect
thereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or
circumstances which would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the
Financials Statements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by its
independent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is any need
for the Company to amend or restate any of the Financial Statements.
10
(l) Absence
of Certain Changes. Since the date of the Company’s most recent audited financial statements contained in an Annual Report on
Form 10-K, there has been no material adverse change and no material adverse development in the business, assets, liabilities, properties,
operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries. Since
the date of the Company’s most recent audited financial statements contained in an Annual Report on Form 10-K, neither the Company
nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually or in the aggregate, outside of
the ordinary course of business or (iii) made any capital expenditures, individually or in the aggregate, outside of the ordinary course
of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating
to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge
or reason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge
of any fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated basis,
are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Initial Closing, will not
be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent” means, (i) with respect to the Company
and its Subsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’
assets is less than the amount required to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below),
(B) the Company and its Subsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts
that would be beyond their ability to pay as such debts mature; and (ii) with respect to the Company and each Subsidiary, individually,
(A) the present fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount
required to pay its respective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable to pay its respective
debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company
or such Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability
to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business or in any transaction, and is
not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s remaining assets constitute
unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed
to be conducted.
(m) No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred or exists,
or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries or any of their respective businesses,
properties, liabilities, prospects, operations (including results thereof) or condition (financial or otherwise), that (i) would be required
to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the SEC relating to
an issuance and sale by the Company of its shares of Common Stock and which has not been publicly announced, (ii) could have a material
adverse effect on any Buyer’s investment hereunder or (iii) could have a Material Adverse Effect.
(n) Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default under
its Articles of Incorporation, any certificate of designation, preferences or rights of any other outstanding series of preferred shares
of the Company or any of its Subsidiaries, or its organizational charter, certificate of formation, memorandum of association, articles
of association, certificate of incorporation or bylaws, as applicable. Neither the Company nor any of its Subsidiaries is in violation
of any judgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for
possible violations which could not, individually or in the aggregate, have a Material Adverse Effect. Without limiting the generality
of the foregoing, except as disclosed in Schedule 3(n), the Company is not in violation of any of the rules, regulations or requirements
of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting or suspension of the
Common Stock by the Principal Market in the foreseeable future. During the two years prior to the date hereof, (i) the Common Stock has
been listed or designated for quotation on the Principal Market, (ii) trading in the shares of Common Stock has not been suspended by
the SEC or the Principal Market and (iii) except as disclosed in the SEC Documents, the Company has received no communication, written
or oral, from the SEC or the Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The
Company and each of its Subsidiaries possess all certificates,
11
authorizations and permits issued by the appropriate regulatory authorities
necessary to conduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would
not have, individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any
notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of
its Subsidiaries is a party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business
practice of the Company or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct
of business by the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate,
which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries.
(o) Foreign Corrupt Practices.
Neither the Company, the Company’s subsidiary or any director, officer, agent, employee, nor any other person acting for or on behalf
of the foregoing (individually and collectively, a “Company Affiliate”) have violated the U.S. Foreign Corrupt Practices
Act (the “FCPA”) or any other applicable anti-bribery or anti-corruption laws, nor has any Company Affiliate offered,
paid, promised to pay, or authorized the payment of any money, or offered, given, promised to give, or authorized the giving of anything
of value, to any officer, employee or any other person acting in an official capacity for any Governmental Entity to any political party
or official thereof or to any candidate for political office (individually and collectively, a “Government Official”)
or to any person under circumstances where such Company Affiliate knew or was aware of a high probability that all or a portion of such
money or thing of value would be offered, given or promised, directly or indirectly, to any Government Official, for the purpose of:(i) (A)
influencing any act or decision of such Government Official in his/her official capacity, (B) inducing such Government Official to do
or omit to do any act in violation of his/her lawful duty, (C) securing any improper advantage, or (D) inducing such Government Official
to influence or affect any act or decision of any Governmental Entity, or
(ii) assisting
the Company or its Subsidiaries in obtaining or retaining business for or with, or directing business to, the Company or its Subsidiaries.
(p) Sarbanes-Oxley
Act. The Company and each Subsidiary is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002,
as amended, and any and all applicable rules and regulations promulgated by the SEC thereunder.
(q) Transactions
With Affiliates. Except as disclosed in the SEC Reports, no current or former employee, partner, director, officer or shareholder
(direct or indirect) of the Company or its Subsidiaries, or any associate, or, to the knowledge of the Company, any affiliate of any thereof,
or any relative with a relationship no more remote than first cousin of any of the foregoing, is presently, or has ever been, (i) a party
to any transaction with the Company or its Subsidiaries (including any contract, agreement or other arrangement providing for the furnishing
of services by, or rental of real or personal property from, or otherwise requiring payments to, any such director, officer or shareholder
or such associate or affiliate or relative Subsidiaries (other than for ordinary course services as employees, officers or directors of
the Company or any of its Subsidiaries)) or (ii) the direct or indirect owner of an interest in any corporation, firm, association or
business organization which is a competitor, supplier or customer of the Company or its Subsidiaries (except for a passive investment
(direct or indirect) in less than 5% of the common equity of a company whose securities are traded on or quoted through an Eligible Market
(as defined in Section 4(f))), nor does any such Person receive income from any source other than the Company or its Subsidiaries which
relates to the business of the Company or its Subsidiaries or should properly accrue to the Company or its Subsidiaries. No employee,
officer, shareholder or director of the Company or any of its Subsidiaries or member of his or her immediate family is indebted to the
Company or its Subsidiaries, as the case may be, nor is the Company or any of its Subsidiaries indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of salary for services rendered, (ii) reimbursement for reasonable
expenses incurred on behalf of the Company, and (iii) for other standard employee benefits made generally available to all employees or
executives (including share option agreements outstanding under any share option plan approved by the Board of Directors of the Company).
12
(r) Equity
Capitalization.
(i) Definitions:
(A) “Common
Stock” means (i) the Company’s common stock, $0.0001 par value per share, and (ii) any capital stock into which such
shares of Common Stock shall have been exchanged or any shares of capital stock resulting from a reclassification of such shares of Common
Stock.
(ii) Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of 22,500,000 shares of
capital stock, consisting of (i) 12,500,000 shares of Common Stock, of which, 1,022,235 shares of Common Stock are issued and outstanding
and no shares of Common Stock are reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes) exercisable
or exchangeable for, or convertible into, shares of Common Stock, and (ii) 10,000,000 shares of “black check” preferred stock,
par value $0.0001, of which (i) 10,000 shares have been designated as Series A Preferred Stock, all of which are issued and outstanding,
(ii) 1,000 shares have been designated as Series B Preferred Stock of the Company, par value $0.0001 (the “Series B Preferred
Stock”) all of which are issued and outstanding, (iii) 3,950 shares have been designated as Series C Preferred Stock of the
Company, par value $0.0001 (the “Series C Preferred Stock”) all of which are issued and outstanding. The Series B Preferred
Stock became non-convertible pursuant to the certificate of amendment to designation of Series B Preferred Stock filed on June 8, 2026.
“Convertible Securities” means any share capital or other security of the Company or any of its Subsidiaries that is
at any time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any share capital or other security of the Company (including, without limitation, Common Stock) or any
of its Subsidiaries and includes the Series B Preferred Stock and Series C Preferred Stock.
(iii) Valid
Issuance; Available Shares; Affiliates. All of such issued and outstanding shares are duly authorized and have been, or upon issuance
will be, validly issued and are fully paid and nonassessable. The SEC Reports sets forth the number of shares of Common Stock that are
(A) reserved for issuance pursuant to Convertible Securities (as defined below) (other than the Notes) and (B) that are, as of the date
hereof, owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption
that only officers, directors and holders of at least 10% of the Company’s issued and outstanding shares of Common Stock are “affiliates”
without conceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of
its Subsidiaries. To the Company’s knowledge, except as set forth in the SEC Reports, no Person owns 10% or more of the Company’s
issued and outstanding shares of Common Stock (calculated based on the assumption that all Convertible Securities, whether or not presently
exercisable or convertible, have been fully exercised or converted (as the case may be) taking account of any limitations on
exercise or conversion (including “blockers”) contained therein without conceding that such identified Person is a 10% shareholder
for purposes of federal securities laws).
(iv) Existing
Securities; Obligations. Except as disclosed in the SEC Reports: (A) none of the Company’s or any Subsidiary’s shares,
interests or share capital is subject to preemptive rights or any other similar rights or Liens suffered or permitted by the Company or
any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or share capital of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares, interests or share capital of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into,
or exercisable or exchangeable for, any shares, interests or share capital of the Company or any of its Subsidiaries; (C) there are no
agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities
under the 1933 Act (except pursuant to the Registration Rights Agreement); (D) there are no outstanding securities or instruments of the
Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its
Subsidiaries; (E) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities; and (F) neither the Company nor any Subsidiary has any share appreciation rights or “phantom stock”
plans or agreements or any similar plan or agreement.
13
(v) Organizational
Documents. The Company has furnished to the Buyers true, correct and complete copies of the Articles of Incorporation as in effect
on the date hereof, and the terms of all Convertible Securities and the material rights of the holders thereof in respect thereto.
(s) Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except as disclosed in Schedule 3(s), has any outstanding
debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of
the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii) is a party to any
contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement
or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statements securing obligations
in any amounts filed in connection with the Company or any of its Subsidiaries; (iv) is in violation of any term of, or in default under,
any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually
or in the aggregate, in a Material Adverse Effect, or (v) is a party to any contract, agreement or instrument relating to any Indebtedness,
the performance of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Neither
the Company nor any of its Subsidiaries have any liabilities or obligations required to be disclosed in the SEC Documents which are not
so disclosed in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’
respective businesses and which, individually or in the aggregate, do not or could not have a Material Adverse Effect. For purposes of
this Agreement: (x) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation,
“capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent
with past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments,
(D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession
or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently
applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F)
above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien
upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such
assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect
of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with
respect thereto.
(t) Litigation.
There is no action, suit, arbitration, proceeding, inquiry or investigation before or by the Principal Market, any court, public board,
other Governmental Entity, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries, the shares of Common Stock or any of the Company’s or its Subsidiaries’ officers
or directors, whether of a civil or criminal nature or otherwise, in their capacities as such. No director, officer or employee of the
Company or any of its subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of
litigation. Without limitation of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated,
any investigation by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company
or any of its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement
filed by the Company under the 1933 Act or the 1934 Act. After reasonable inquiry of its employees, the Company is not aware of any fact
which might result in or form the basis for any such action, suit, arbitration, investigation, inquiry or other proceeding. Neither the
Company nor any of its Subsidiaries is subject to any order, writ, judgment, injunction, decree, determination or award of any Governmental
Entity.(u) Insurance. The Company and each of its Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary
in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused
any insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any reason to believe that it will
be unable to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a Material Adverse Effect.
14
(v) Employee
Relations. Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member
of a union. The Company and its Subsidiaries believe that their relations with their employees are good. No executive officer (as defined
in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any of its Subsidiaries has notified the Company
or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s
employment with the Company or any such Subsidiary. No current (or former) executive officer or other key employee of the Company or any
of its Subsidiaries is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure
or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive covenant, and the
continued employment of each such executive officer or other key employee (as the case may be) does not subject the Company or any of
its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with
all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and
conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.
(w) Title.
(i) Real
Property. Each of the Company and its Subsidiaries holds good title to all real property, leases in real property, facilities or other
interests in real property owned or held by the Company or any of its Subsidiaries (the “Real Property”) owned by the
Company or any of its Subsidiaries (as applicable). The Real Property is free and clear of all Liens and is not subject to any rights
of way, building use restrictions, exceptions, variances, reservations, or limitations of any nature except for (a) Liens for current
taxes not yet due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property
subject thereto. Any Real Property held under lease by the Company or any of its Subsidiaries are held by them under valid, subsisting
and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such
property and buildings by the Company or any of its Subsidiaries.
(ii) Fixtures
and Equipment. Each of the Company and its Subsidiaries (as applicable) has good title to, or a valid leasehold interest in, the tangible
personal property, equipment, improvements, fixtures, and other personal property and appurtenances that are used by the Company or its
Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”). The Fixtures and Equipment
are structurally sound, are in good operating condition and repair, are adequate for the uses to which they are being put, are not in
need of maintenance or repairs except for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s
and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the Initial Closing. Each of the Company
and its Subsidiaries owns all of its Fixtures and Equipment free and clear of all Liens except for (a) liens for current taxes not yet
due and (b) zoning laws and other land use restrictions that do not impair the present or anticipated use of the property subject thereto.
(x) Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names, service
marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and registrations therefor
(as applicable) (“Intellectual Property Rights”) necessary to conduct their respective businesses as now conducted
and presently proposed to be conducted. Each of the patents owned by the Company or any of its Subsidiaries is listed in the SEC Reports.
None of the Company’s Intellectual Property Rights have expired or terminated or have been abandoned or are expected to expire or
terminate or are expected to be abandoned, within three years from the date of this Agreement. The Company does not have any knowledge
of any infringement by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of
its Subsidiaries regarding its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts or
circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual Property Rights.
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(y) Environmental
Laws. To the extent applicable, the Company and its Subsidiaries (A) are in compliance with any and all Environmental Laws (as defined
below), (B) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (C) are in compliance with all terms and conditions of any such permit, license or approval where, in each of
the foregoing clauses (A), (B) and (C), the failure to so comply could be reasonably expected to have, individually or in the aggregate,
a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local or foreign laws relating to
pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”)
into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments,
licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(i) To
the extent applicable, no Hazardous Materials:
(A) have
been disposed of or otherwise released from any Real Property of the Company or any of its Subsidiaries in violation of any Environmental
Laws; or
(B) are
present on, over, beneath, in or upon any Real Property or any portion thereof in quantities that would constitute a violation of any
Environmental Laws. No prior use by the Company or any of its Subsidiaries of any Real Property has occurred that violates any Environmental
Laws, which violation would have a material adverse effect on the business of the Company or any of its Subsidiaries.
(ii) Neither
the Company nor any of its Subsidiaries knows of any other person who or entity which has stored, treated, recycled, disposed of or otherwise
located on any Real Property any Hazardous Materials, including, without limitation, such substances as asbestos and polychlorinated biphenyls.
(iii) None
of the Real Properties are on any federal or state “Superfund” list or Liability Information System (“CERCLIS”)
list or any state environmental agency list of sites under consideration for CERCLIS, nor subject to any environmental related Liens.
(z) Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.
(aa) Tax Status. The
Company and each of its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested
in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by
the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries know of no basis for any such claim. The
Company is not operated in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297 of the Internal
Revenue Code of 1986, as amended (the “Code”). The net operating loss carryforwards (“NOLs”) for
United States federal income tax purposes of the consolidated group of which the Company is the common parent, if any, shall not be adversely
effected by the transactions contemplated hereby. The transactions contemplated hereby do not constitute an “ownership change”
within the meaning of Section 382 of the Code, thereby preserving the Company’s ability to utilize such NOLs.
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(bb) Internal Accounting
and Disclosure Controls. Except as otherwise disclosed in the SEC Documents, the Company and each of its Subsidiaries maintains internal
control over financial reporting (as such term is defined in Rule 13a-15(f) under the 1934 Act) that is effective to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles, including that (i) transactions are executed in accordance with management’s general
or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with
GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance
with management’s general or specific authorization and (iv) the recorded accountability for assets and liabilities is compared
with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any difference. The Company
maintains disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are effective in ensuring
that information required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed,
summarized and reported, within the time periods specified in the rules and forms of the SEC, including, without limitation, controls
and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under
the 1934 Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers
and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure. Neither the
Company nor any of its Subsidiaries has received any notice or correspondence from any accountant, Governmental Entity or other Person
relating to any potential material weakness or significant deficiency in any part of the internal controls over financial reporting of
the Company or any of its Subsidiaries.
(cc) Off Balance Sheet Arrangements.
There is no transaction, arrangement, or other relationship between the Company or any of its Subsidiaries and an unconsolidated or other
off balance sheet entity that is required to be disclosed by the Company in the SEC Documents and is not so disclosed or that otherwise
could be reasonably likely to have a Material Adverse Effect.
(dd) Investment Company Status.
The Company is not, and upon consummation of the sale of the Securities will not be, an “investment company,” an affiliate
of an “investment company,” a company controlled by an “investment company” or an “affiliated person”
of, or “promoter” or “principal underwriter” for, an “investment company” as such terms are defined
in the Investment Company Act of 1940, as amended.(ee) Acknowledgement Regarding Buyers’
Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure of the transactions contemplated
by the Transaction Documents, in accordance with the terms thereof, none of the Buyers have been asked by the Company or any of its Subsidiaries
to agree, nor has any Buyer agreed with the Company or any of its Subsidiaries, to desist from effecting any transactions in or with respect
to (including, without limitation, purchasing or selling, long and/or short) any securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold any of the Securities for any specified term; (ii) any Buyer, and counterparties
in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short”
position in the Common Stock which was established prior to such Buyer’s knowledge of the transactions contemplated by the Transaction
Documents; (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s length counterparty in any
“derivative” transaction; and (iv) each Buyer may rely on the Company’s obligation to timely deliver shares of Common
Stock upon conversion, exercise or exchange, as applicable, of the Securities as and when required pursuant to the Transaction Documents
for purposes of effecting trading in the Common Stock of the Company. The Company further understands and acknowledges that following
the public disclosure of the transactions contemplated by the Transaction Documents pursuant to the Initial 8-K Filing (as defined below)
one or more Buyers may engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of
borrowable shares of Common Stock) at various times during the period that the Securities are outstanding, including, without limitation,
during the periods that the value and/or number of the Conversion Shares deliverable with respect to the Securities are being determined
and such hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable shares of Common
Stock), if any, can reduce the value of the existing shareholders’ equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company acknowledges that such aforementioned hedging and/or trading activities
do not constitute a breach of this Agreement, the Notes or any other Transaction Document or any of the documents executed in connection
herewith or therewith.
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(ff) Manipulation of Price.
Neither the Company nor any of its Subsidiaries has, and, to the knowledge of the Company, no Person acting on their behalf has, directly
or indirectly, (i) taken any action designed to cause or to result in the stabilization or manipulation of the price of any security of
the Company or any of its Subsidiaries to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid
any compensation for soliciting purchases of, any of the Securities, (iii) paid or agreed to pay to any Person any compensation for soliciting
another to purchase any other securities of the Company or any of its Subsidiaries or (iv) paid or agreed to pay any Person for research
services with respect to any securities of the Company or any of its Subsidiaries.
(gg) U.S. Real Property Holding
Corporation. Neither the Company nor any of its Subsidiaries is, or has ever been, and so long as any of the Securities are held by
any of the Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of the Code, and the
Company and each Subsidiary shall so certify upon any Buyer’s request.
(hh) Registration Eligibility.
The Company is eligible to register the Registrable Securities (as defined in the Registration Rights Agreement) for resale by the Buyers
using Form S-1 promulgated under the 1933 Act.
(ii) Transfer
Taxes. On each Closing Date, all share transfer or other taxes (other than income or similar taxes) which are required to be paid
in connection with the issuance, sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been, fully
paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.
(jj) Bank Holding Company
Act. Neither the Company nor any of its Subsidiaries is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”)
and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company
nor any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares
of any class of voting securities or twenty-five percent (25%) or more of the total equity of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a controlling
influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(kk) Shell Company Status.
The Company is not, and has never been, an issuer identified in, or subject to, Rule 144(i).
(ll) Illegal or Unauthorized
Payments; Political Contributions. Neither the Company nor any of its Subsidiaries nor, to the best of the Company’s knowledge
(after reasonable inquiry of its officers and directors), any of the officers, directors, employees, agents or other representatives of
the Company or any of its Subsidiaries or any other business entity or enterprise with which the Company or any Subsidiary is or has been
affiliated or associated, has, directly or indirectly, made or authorized any payment, contribution or gift of money, property, or services,
whether or not in contravention of applicable law, (i) as a kickback or bribe to any Person or (ii) to any political organization, or
the holder of or any aspirant to any elective or appointive public office except for personal political contributions not involving the
direct or indirect use of funds of the Company or any of its Subsidiaries.
(mm) Money Laundering.
The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act of 2001 and all other applicable
U.S. and non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws, regulations and Executive Orders
and sanctions programs administered by the U.S. Office of Foreign Assets Control, including, but not limited, to (i) Executive Order 13224
of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or
Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31 CFR, Subtitle B, Chapter V.
(nn) Management. During
the past five year period, no current or former officer or director or, to the knowledge of the Company, no current ten percent (10%)
or greater shareholder of the Company or any of its Subsidiaries has been the subject of:
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(i) a
petition under bankruptcy laws or any other insolvency or moratorium law or the appointment by a court of a receiver, fiscal agent or
similar officer for such Person, or any partnership in which such person was a general partner at or within two years before the filing
of such petition or such appointment, or any corporation or business association of which such person was an executive officer at or within
two years before the time of the filing of such petition or such appointment;
(ii) a
conviction in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations that do not relate
to driving while intoxicated or driving under the influence);
(iii) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily
enjoining any such person from, or otherwise limiting, the following activities:
(1) Acting
as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity Futures Trading Commission or an associated person of any of the foregoing,
or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with
such activity;
(2) Engaging
in any particular type of business practice; or
(3) Engaging
in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of securities
laws or commodities laws;
(iv) any
order, judgment or decree, not subsequently reversed, suspended or vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to engage in any activity described in the preceding sub paragraph, or to be
associated with persons engaged in any such activity;
(v) a
finding by a court of competent jurisdiction in a civil action or by the SEC or other authority to have violated any securities law, regulation
or decree and the judgment in such civil action or finding by the SEC or any other authority has not been subsequently reversed, suspended
or vacated; or
(vi) a
finding by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal
commodities law, and the judgment in such civil action or finding has not been subsequently reversed, suspended or vacated.
(oo) Stock
Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock option
plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock
option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan
has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice of the Company to knowingly
grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement
of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(pp) No Disagreements with
Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably anticipated by the Company
to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current
with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations
under any of the Transaction Documents. In addition, on or prior to the date hereof, the Company had discussions with its accountants
about its financial statements previously filed with the SEC. Based on those discussions, the Company has no reason to believe that it
will need to restate any such financial statements or any part thereof.
19
(qq) No Disqualification
Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933 Act (“Regulation
D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering contemplated hereby, any beneficial owner of 20% or more of the Company’s outstanding
voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the 1933
Act) connected with the Company in any capacity at the time of sale (each, an “Issuer Covered Person” and, together,
“Issuer Covered Persons”) is subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i)
to (viii) under the 1933 Act (a “Disqualification Event”), except for a Disqualification Event covered by Rule 506(d)(2)
or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Buyers
a copy of any disclosures provided thereunder.
(rr) Other Covered Persons.
The Company is not aware of any Person that has been or will be paid (directly or indirectly) remuneration for solicitation of Buyers
or potential purchasers in connection with the sale of any Regulation D Securities.
(ss) No Additional Agreements.
The Company does not have any agreement or understanding with any Buyer with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.
(tt) Public Utility Holding
Act. None of the Company nor any of its Subsidiaries is a “holding company,” or an “affiliate” of a “holding
company,” as such terms are defined in the Public Utility Holding Act of 2005.
(uu) Federal Power Act.
None of the Company nor any of its Subsidiaries is subject to regulation as a “public utility” under the Federal Power Act,
as amended.
(vv) Ranking of Notes.
Other than Permitted Indebtedness (as defined in the Notes) secured by Permitted Liens (as defined in the Notes), if any, no Indebtedness
of the Company, at each Closing, will be senior to, or pari passu with, the Notes in right of payment, whether with respect to
payment or redemptions, interest, damages, upon liquidation or dissolution or otherwise.
(ww) Cybersecurity. To
the extent applicable, the Company and its Subsidiaries’ information technology assets and equipment, computers, systems, networks,
hardware, software, websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate
and perform in all material respects as required in connection with the operation of the business of the Company and its subsidiaries
as currently conducted, free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants
that would reasonably be expected to have a Material Adverse Effect on the Company’s business. The Company and its Subsidiaries
have implemented and maintained commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards
to maintain and protect their material confidential information and the integrity, continuous operation, redundancy and security of all
IT Systems and data, including “Personal Data,” used in connection with their businesses. “Personal Data”
means (i) a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification
number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any
information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended;
(iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU
2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability
and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”);
and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection
or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations,
outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the
duty to notify any other person or such, nor any incidents under internal review or investigations relating to the same except in each
case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The
Company and its Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations
of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy
and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access,
misappropriation or modification except in each case, where such would not, either individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
20
(xx) Compliance
with Data Privacy Laws. To the extent applicable, the Company and its Subsidiaries are, and at all prior times were, in compliance
with all applicable state and federal data privacy and security laws and regulations, including without limitation HIPAA, and the Company
and its Subsidiaries have taken commercially reasonable actions to prepare to comply with, and since May 25, 2018, have been and currently
are in compliance with, the GDPR (EU 2016/679) (collectively, the “Privacy Laws”) except in each case, where such
would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. To ensure compliance
with the Privacy Laws, the Company and its Subsidiaries have in place, comply with, and take appropriate steps reasonably designed to
ensure compliance in all material respects with their policies and procedures relating to data privacy and security and the collection,
storage, use, disclosure, handling, and analysis of Personal Data (the “Policies”). The Company and its Subsidiaries
have at all times made all disclosures to users or customers required by applicable laws and regulatory rules or requirements, and none
of such disclosures made or contained in any Policy have, to the knowledge of the Company, been inaccurate or in violation of any applicable
laws and regulatory rules or requirements in any material respect. The Company further certifies that neither it nor any Subsidiary:
(i) has received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy
Laws, and has no knowledge of any event or condition that would reasonably be expected to result in any such notice; (ii) is currently
conducting or paying for, in whole or in part, any investigation, remediation, or other corrective action pursuant to any Privacy Law;
or (iii) is a party to any order, decree, or agreement that imposes any obligation or liability under any Privacy Law.
(yy) Disclosure. The
Company confirms that neither it nor any other Person acting on its behalf has provided any of the Buyers or their agents or counsel with
any information that constitutes or could reasonably be expected to constitute material, non-public information concerning the Company
or any of its Subsidiaries, other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents.
The Company understands and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities
of the Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries is
true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which they were made, not misleading. All of the written information
furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to each Buyer pursuant to or in connection with
this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all material respects as of the date
on which such information is so provided and will not contain any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. Each
press release issued by the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this Agreement did
not at the time of release contain any untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. No event
or circumstance has occurred or information exists with respect to the Company or any of its Subsidiaries or its or their business, properties,
liabilities, prospects, operations (including results thereof) or conditions (financial or otherwise), which, under applicable law, rule
or regulation, requires public disclosure at or before the date hereof or announcement by the Company but which has not been so publicly
disclosed. All financial projections and forecasts that have been prepared by or on behalf of the Company or any of its Subsidiaries and
made available to you have been prepared in good faith based upon reasonable assumptions and represented, at the time each such financial
projection or forecast was delivered to each Buyer, the Company’s best estimate of future financial performance (it being recognized
that such financial projections or forecasts are not to be viewed as facts and that the actual results during the period or periods covered
by any such financial projections or forecasts may differ from the projected or forecasted results). The Company acknowledges and agrees
that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those
specifically set forth in Section 2.
(zz) Placement Agent’s
Fees. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for Persons engaged by the Buyers or their investment advisors) relating to or arising out of the transactions
contemplated hereby in connection with the sale of the Securities. The Company shall pay, and hold the Buyers harmless against, any liability,
loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with any such
claim. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the offer or
sale of the Securities other than Chardan Capital Markets LLC and Digital Offering LLC.
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4. COVENANTS.
(a) Best
Efforts. Each Buyer shall use its best efforts to timely satisfy each of the covenants hereunder and conditions to be satisfied by
it as provided in Section 6 of this Agreement. The Company shall use its best efforts to timely satisfy each of the covenants hereunder
and conditions to be satisfied by it as provided in Section 7 of this Agreement.
(b) Form
D and Blue Sky. The Company shall file a Form D with respect to the Securities as required under Regulation D and to provide a copy
thereof to each Buyer promptly after such filing. The Company shall, on or before the applicable Closing Date, take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify the Securities for sale to the Buyers
at such Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States
(or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyers on or prior
to such Closing Date. Without limiting any other obligation of the Company under this Agreement, the Company shall timely make all filings
and reports relating to the offer and sale of the Securities required under all applicable securities laws (including, without limitation,
all applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall comply with all applicable
foreign, federal, state and local laws, statutes, rules, regulations and the like relating to the offering and sale of the Securities
to the Buyers.
(c) Reporting
Status. Until the later of (x) the Additional Closing Expiration Date and (y) such date on which the Buyers shall have sold all of
the Registrable Securities (the “Reporting Period”), the Company shall timely file all reports required to be filed
with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required to file reports under the
1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require or otherwise permit such termination.
(d) Use
of Proceeds. The Company shall use the net proceeds from the sale of the Securities at any Closing (A) for the repayment of certain
indebtedness of the Company as set forth in Schedule 4(d) hereto, and (B) the remainder for general corporate purposes and working
capital, but the net proceeds shall not be used, directly or indirectly, for (i) the satisfaction of any indebtedness of the Company or
any of its Subsidiaries, except for the amounts set forth in Schedule 4(d) hereto, (ii) the redemption or repurchase of any securities
of the Company or any of its Subsidiaries, or (iii) the settlement of any outstanding litigation.
(e) Financial
Information. The Company agrees to send the following to each Investor (as defined in the Registration Rights Agreement) during the
Reporting Period (i) unless the following are filed with the SEC through EDGAR and are available to the public through the EDGAR system,
within one (1) Business Day after the filing thereof with the SEC, a copy of its Annual Report on Form 10-K and Quarterly Reports on Form
10-Q, any other interim reports or any consolidated balance sheets, income statements, shareholders’ equity statements and/or cash
flow statements for any period other than annual, any Current Reports on Form 8-K and any registration statements (other than on Form
S-8) or amendments filed pursuant to the 1933 Act, (ii) unless the following are either filed with the SEC through EDGAR or are otherwise
widely disseminated via a recognized news release service (such as PR Newswire), on the same day as the release thereof, e-mail copies
of all press releases issued by the Company or any of its Subsidiaries and (iii) unless the following are filed with the SEC through EDGAR,
copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with
the making available or giving thereof to the shareholders.
(f) Listing.
The Company shall promptly secure the listing or designation for quotation (as the case may be) of all of the Registrable Securities upon
each national securities exchange and automated quotation system, if any, upon which the Common Stock are then listed or designated for
quotation (as the case may be) (subject to official notice of issuance) and shall maintain such listing or designation for quotation (as
the case may be) of all Registrable Securities from time to time issuable under the terms of the Transaction Documents on such national
securities exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or authorization for quotation
(as the case may be) on the Principal Market, The New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, or the
Nasdaq Global Market (each, an “Eligible Market”). Neither the Company nor any of its Subsidiaries shall take any action
which could be reasonably expected to result in the delisting or suspension of the Common Stock on an Eligible Market. The Company shall
pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).
22
(g) Fees.
At each Closing, the Lead Buyer’s (as defined in the Schedule of Buyers) diligence and legal expenses and for all costs and expenses
incurred by the Lead Buyer or its affiliates in connection with the structuring, documentation, negotiation and applicable closing of
the transactions contemplated by the Transaction Documents (including, without limitation, as applicable, all legal fees of outside counsel
and disbursements of Sullivan & Worcester LLP, counsel to the Lead Buyer, any other fees and expenses in connection with the structuring,
documentation, negotiation and closing of the transactions contemplated by the Transaction Documents and any amendments thereof or waivers
with respect thereto and due diligence and regulatory filings in connection therewith) (the “Transaction Expenses”),
provided that the Company shall promptly reimburse Sullivan & Worcester LLP, on demand for all Transaction Expenses applicable thereto
in accordance hereto not so reimbursed through such withholding at such applicable Closing; provided, however, that the total reimbursement
of legal expenses to Sullivan & Worcester LLP for expenses incurred with respect to the Initial Closing and not including any legal
expenses incurred from any amendments, waivers or modifications to the Transaction Documents, shall not exceed $150,000. The Company shall
be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agent fees, DTC (as defined below)
fees or broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated
hereby. The Company shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without limitation, reasonable
attorneys’ fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment. Except as otherwise
set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in connection with the sale of the Securities
to the Buyers.
(h) Pledge
of Securities. Notwithstanding anything to the contrary contained in this Agreement and subject to compliance with state and federal
securities laws, the Company acknowledges and agrees that the Securities may be pledged by a Buyer in connection with a bona fide margin
agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall not be deemed to be
a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be required to provide
the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this Agreement or any other Transaction
Document, including, without limitation, Section 2(g) hereof; provided that a Buyer and its pledgee shall be required to comply with the
provisions of Section 2(g) hereof in order to effect a sale, transfer or assignment of Securities to such pledgee. The Company hereby
agrees to execute and deliver such documentation as a pledgee of the Securities may reasonably request in connection with a pledge of
the Securities to such pledgee by a Buyer.
(i) Disclosure
of Transactions and Other Material Information.
(i) Disclosure
of Transaction. On or before 9:30 a.m., New York time, on the first (1st) Business Day after the date of this Agreement,
the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction
Documents in the form required by the 1934 Act and attaching all the material Transaction Documents (including, without limitation, this
Agreement (and all schedules to this Agreement), the form of Notes, the form of Guaranties, the form of Security Agreement, and the form
of the Registration Rights Agreement) (including all attachments, the “Initial 8-K Filing”). From and after the filing
of the Initial 8-K Filing (but prior to the delivery of an Additional Closing Notice to the Company), the Company shall have disclosed
all material, non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their
respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In
addition, effective upon the filing of the Initial 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or
similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other
hand, shall terminate. From and after the filing of the Initial 8-K Filing (but prior to the delivery of an Additional Closing Notice
to the Buyers (or the receipt of an Additional Closing Notice from any Buyer, as applicable)), the Company shall have disclosed all material,
non-public information (if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company shall, on or
before 9:30 a.m., New York time, on the first (1st) Business Day after the Company receives (or delivers) an Additional Closing Notice,
23
either issue a press release (each, an “Additional Press Release”) or file a Current Report on Form 8-K (each, an “Additional
8-K Filing”, and together with the Initial 8-K Filing, the “8-K Filings”), in each case reasonably acceptable
to such Buyer participation in such Additional Closing, disclosing that “an institutional investor” has elected to deliver
an Additional Closing Notice to the Company or the Company has elected to effect an Additional Closing, as applicable. From and after
the filing of the Additional Press Release or Additional 8-K Filing, the Company shall have disclosed all material, non-public information
(if any) provided to any of the Buyers by the Company or any of its Subsidiaries or any of their respective officers, directors, employees
or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the filing of the
Additional 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees
or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate.
(ii) Limitations
on Disclosure. The Company shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents not to, provide any Buyer with any material, non-public information regarding the Company or any of its
Subsidiaries from and after the date hereof without the express prior written consent of such Buyer (which may be granted or withheld
in such Buyer’s sole discretion) except as required by applicable law and regulations or pursuant to Section 4(o) hereof. In the
event of a breach of any of the foregoing covenants, including, without limitation, Section 4(o) of this Agreement, or any of the
covenants or agreements contained in any other Transaction Document, by the Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any other
remedy provided herein or in the Transaction Documents, such Buyer shall have the right to make a public disclosure, in the form of a
press release, public advertisement or otherwise, of such breach or such material, non-public information, as applicable, without the
prior approval by the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees or agents. No
Buyer shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees,
affiliates, shareholders or agents, for any such disclosure. To the extent that the Company delivers any material, non-public information
to a Buyer without such Buyer’s consent, the Company hereby covenants and agrees that such Buyer shall not have any duty of confidentiality
with respect to, or a duty not to trade on the basis of, such material, non-public information. Subject to the foregoing, neither the
Company, its Subsidiaries nor any Buyer shall issue any press releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, the Company shall be entitled, without the prior approval of any Buyer, to make the Press Release
and any press release or other public disclosure with respect to such transactions (i) in substantial conformity with the 8-K Filings
and contemporaneously therewith and (ii) as is required by applicable law and regulations (provided that in the case of clause (i) each
Buyer shall be consulted by the Company in connection with any such press release or other public disclosure prior to its release). Without
the prior written consent of the applicable Buyer (which may be granted or withheld in such Buyer’s sole discretion), the Company
shall not (and shall cause each of its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing, announcement,
release or otherwise. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would
otherwise be true, the Company expressly acknowledges and agrees that no Buyer shall have (unless expressly agreed to by a particular
Buyer after the date hereof in a written definitive and binding agreement executed by the Company and such particular Buyer (it being
understood and agreed that no Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to, or a
duty not to trade on the basis of, any material, non-public information regarding the Company or any of its Subsidiaries.
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(iii) Other
Confidential Information. Disclosure Failures; Disclosure Delay Payments. In addition to other remedies set forth in this Section
4(i), and without limiting anything set forth in any other Transaction Document, at any time after the Closing Date if the Company, any
of its Subsidiaries, or any of their respective officers, directors, employees or agents, provides any Buyer with material non-public
information relating to the Company or any of its Subsidiaries (each, the “Confidential Information”), the Company
shall, on or prior to the applicable Required Disclosure Date (as defined below), publicly disclose such Confidential Information on a
Current Report on Form 8-K or otherwise (each, a “Disclosure”). From and after such Disclosure, the Company shall have
disclosed all Confidential Information provided to such Buyer by the Company or any of its Subsidiaries or any of their respective officers,
directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon
such Disclosure, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether
written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or
agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. In the event that the Company
fails to effect such Disclosure on or prior to the Required Disclosure Date and such Buyer shall have possessed Confidential Information
for at least ten (10) consecutive Trading Days (each, a “Disclosure Failure”), then, as partial relief for the damages
to such Buyer by reason of any such delay in, or reduction of, its ability to buy or sell shares of Common Stock after such Required Disclosure
Date (which remedy shall not be exclusive of any other remedies available at law or in equity), the Company shall pay to such Buyer an
amount in cash equal to the greater of (I) two percent (2%) of the aggregate principal amount of Notes purchased by such Buyer hereunder
and (II) the applicable Disclosure Restitution Amount, on each of the following dates (each, a “Disclosure Delay Payment Date”):
(i) on the date of such Disclosure Failure and (ii) on every thirty (30) day anniversary such Disclosure Failure until the earlier of
(x) the date such Disclosure Failure is cured and (y) such time as all such non-public information provided to such Buyer shall cease
to be Confidential Information (as evidenced by a certificate, duly executed by an authorized officer of the Company to the foregoing
effect) (such earlier date, as applicable, a “Disclosure Cure Date”). Following the initial Disclosure Delay Payment
for any particular Disclosure Failure, without limiting the foregoing, if a Disclosure Cure Date occurs prior to any thirty (30) day anniversary
of such Disclosure Failure, then such Disclosure Delay Payment (prorated for such partial month) shall be made on the second (2nd) Business
Day after such Disclosure Cure Date. The payments to which a Buyer shall be entitled pursuant to this Section 4(i)(iii) are referred to
herein as “Disclosure Delay Payments.” In the event the Company fails to make Disclosure Delay Payments in a timely
manner in accordance with the foregoing, such Disclosure Delay Payments shall bear interest at the rate of two percent (2%) per month
(prorated for partial months) until paid in full.
(iv) For
the purpose of this Agreement the following definitions shall apply:
(1)
“Disclosure Failure Market Price” means, as of any Disclosure Delay Payment Date, the price computed as the quotient
of (I) the sum of the five (5) highest VWAPs (as defined in the Notes) of the Common Stock during the applicable Disclosure Restitution
Period (as defined below), divided by (II) five (5) (such period, the “Disclosure Failure Measuring Period”). All such
determinations to be appropriately adjusted for any share dividend, share split, share combination, reclassification or similar transaction
that proportionately decreases or increases the Common Stock during such Disclosure Failure Measuring Period.
(2) “Disclosure
Restitution Amount” means, as of any Disclosure Delay Payment Date, the product of (x) difference of (I) the Disclosure Failure
Market Price less (II) the lowest purchase price, per share of Common Stock, of any shares of Common Stock issued or issuable to such
Buyer pursuant to this Agreement or any other Transaction Documents, multiplied by (y) 10% of the aggregate daily dollar trading volume
(as reported on the Reporting Service (as defined in the Notes)) of the shares of Common Stock on the Principal Market for each Trading
Day (as defined in the Notes) either (1) with respect to the initial Disclosure Delay Payment Date, during the period commencing on the
applicable Required Disclosure Date through and including the Trading Day immediately prior to the initial Disclosure Delay Payment Date
or (2) with respect to each other Disclosure Delay Payment Date, during the period commencing the immediately preceding Disclosure Delay
Payment Date through and including the Trading Day immediately prior to such applicable Disclosure Delay Payment Date (such applicable
period, the “Disclosure Restitution Period”).
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(3) “Required
Disclosure Date” means (x) if such Buyer authorized the delivery of such Confidential Information, either (I) if the Company
and such Buyer have mutually agreed upon a date (as evidenced by an e-mail or other writing) of Disclosure of such Confidential Information,
such agreed upon date or (II) otherwise, the seventh (7th) calendar day after the date such Buyer first received any Confidential
Information or (y) if such Buyer did not authorize the delivery of such Confidential Information, the first (1st) Business
Day after such Buyer’s receipt of such Confidential Information.
(j) Additional
Registration Statements. Until the Applicable Date (as defined below) and at any time thereafter while any Registration Statement
is not effective or the prospectus contained therein is not available for use or any Current Public Information Failure (as defined in
the Registration Rights Agreement) exists, the Company shall not file a registration statement or an offering statement under the 1933
Act relating to securities that are not the Registrable Securities (other than a registration statement on Form S-8 or such supplements
or amendments to registration statements that are outstanding and have been declared effective by the SEC as of the date hereof (solely
to the extent necessary to keep such registration statements effective and available and not with respect to any Subsequent Placement)).
“Applicable Date” means the earlier of (x) the first date on which the resale by the Buyers of all the Registrable
Securities required to be filed on the initial Registration Statement (as defined in the Registration Rights Agreement) pursuant to the
Registration Rights Agreement is declared effective by the SEC (and each prospectus contained therein is available for use on such date)
or (y) the first date on which all of the Registrable Securities then outstanding are eligible to be resold by the Buyers pursuant to
Rule 144 (or, if a Current Public Information Failure has occurred and is continuing, such later date after which the Company has cured
such Current Public Information Failure).
(k) Additional
Issuance of Securities. During the period commencing on the date hereof and ending on the later of (x) the date no Notes remain outstanding
and (y) the Additional Closing Expiration Date (the “Covenant Period”), the Company will not, without the prior written
consent of the Required Holders, issue any Notes (other than to the Buyers as contemplated hereby) and the Company shall not issue any
other securities that would cause a breach or default under the Notes. The Company agrees that for the period commencing on each Closing
Date and ending on the date immediately following the 40th Trading Day after later of (i) such Closing Date, and (ii) the Effective
Date of the Registration Statement registering the resale of the Registrable Securities for such applicable Closing (provided that such
period shall be extended by the number of calendar days during such period and any extension thereof contemplated by this proviso on which
any Registration Statement is not effective or any prospectus contained therein is not available for use or any Current Public Information
Failure exists) (the “Restricted Period”), neither the Company nor any of its Subsidiaries shall directly or indirectly
issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any
option or right to purchase or other disposition of) any equity security or any equity-linked or related security (including, without
limitation, any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any Convertible
Securities (as defined below), any debt, any preferred shares or any purchase rights) (any such issuance, offer, sale, grant, disposition
or announcement (whether occurring during the Restricted Period or at any time thereafter) is referred to as a “Subsequent Placement”).
Notwithstanding the foregoing, this Section 4(k) shall not apply in respect of the issuance of (i) shares of Common Stock or standard
options to purchase shares of Common Stock to directors, officers or employees of the Company or any Subsidiary in their capacity as such
pursuant to an Approved Stock Plan (as defined below) of the Company or such agreements with such directors, officers or employees of
the Company or any Subsidiary existing as of the date of this Agreement, provided that (A) all such issuances (taking into account the
shares of Common Stock issuable upon exercise of such options) pursuant to this clause (i) do not, in the aggregate, exceed more than
5.0%, in any fiscal year, of the shares of Common stock issued and outstanding as of December 31st for the immediately preceding
fiscal year and (B) the exercise price of any such options is not lowered, none of such options are amended to increase the number of
shares issuable thereunder and none of the terms or conditions of any such options are otherwise materially changed in any manner that
adversely affects any of the Buyers; (ii) shares of Common stock issued upon the conversion or exercise of Convertible Securities (other
than standard options to purchase shares of Common Stock issued pursuant to an Approved Stock Plan or such agreements with such directors,
officers or employees of the Company existing as of the date of this Agreement that are covered by clause (i) above) issued prior to the
date hereof,
26
provided that the conversion, exercise or other method of issuance (as the case may be) of any such Convertible Security
is made solely pursuant to the conversion, exercise or other method of issuance (as the case may be) provisions of such Convertible Security
that were in effect on the date immediately prior to the date of this Agreement, the conversion, exercise or issuance price of any such
Convertible Securities (other than standard options to purchase shares of Common Stock issued pursuant to an Approved Stock Plan or such
agreements with such directors, officers or employees of the Company existing as of the date of this Agreement that are covered by clause
(i) above) is not lowered, none of such Convertible Securities (other than standard options to purchase shares of Common Stock issued
pursuant to an Approved Stock Plan or such agreements with such directors, officers or employees of the Company existing as of the date
of this Agreement that are covered by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the
terms or conditions of any such Convertible Securities (other than standard options to purchase shares of Common Stock issued pursuant
to an Approved Stock Plan or such agreements with such directors, officers or employees of the Company existing as of the date of this
Agreement that are covered by clause (i) above) are otherwise materially changed in any manner that adversely affects any of the Buyers;
(iii) securities issued pursuant to that certain Equity Purchase Facility Agreement, dated as of July 16, 2026, by and between the Company
and the investor named therein (the “July EPFA”); and (iv) the Conversion Shares (each of the foregoing in clauses
(i) through (iv), collectively the “Excluded Securities”). “Approved Stock Plan” means any employee
benefit plan which has been approved by the board of directors of the Company prior to or subsequent to the date hereof pursuant to which
Common Stock and standard options to purchase shares of Common Stock may be issued to any employee, officer or director for services provided
to the Company or any Subsidiary in their capacity as such.
(l) Reservation
of Shares. During the Covenant Period, the Company shall take all action necessary to at all times have authorized, and reserved for
the purpose of issuance, no less than the maximum number of shares of Common Stock issuable upon conversion of all the Notes then outstanding
(assuming for purposes hereof that (i) all Second Notes and all Additional Notes issuable hereunder shall have been issued at a Second
Closing and at an Additional Closing on the Initial Closing Date, (ii) the Principal under the First Notes is doubled, (iii) the Notes
are convertible at the Floor Price as of such applicable date of determination, (iv) interest on the Notes shall accrue through the second
(2nd) anniversary of the Initial Closing Date and will be converted to shares of Common Stock at a conversion price equal to the Floor
Price as of such applicable date of determination and (v) any such conversion shall not take into account any limitations on the conversion
of the Notes set forth in the Notes) (collectively, the “Required Reserve Amount”); provided that at no time shall
the number of shares of Common Stock reserved pursuant to this Section 4(l) be reduced other than proportionally in connection with any
conversion, exercise and/or redemption, as applicable of Notes. If at any time the number of shares of Common Stock authorized and reserved
for issuance is not sufficient to meet the Required Reserve Amount, the Company will promptly take all corporate action necessary to authorize
and reserve a sufficient number of shares, including, without limitation, calling a special meeting of shareholders to authorize additional
shares to meet the Company’s obligations pursuant to the Transaction Documents, in the case of an insufficient number of authorized
shares, obtain shareholder approval of an increase in such authorized number of shares, and voting the management shares of the Company
in favor of an increase in the authorized shares of the Company to ensure that the number of authorized shares is sufficient to meet the
Required Reserve Amount.
(m) Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or regulation
of any Governmental Entity, except where such violations would not reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect.
(n) Other
Notes; Variable Securities. During the Covenant Period, the Company and each Subsidiary shall be prohibited from effecting or entering
into an agreement to effect any Subsequent Placement involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible Securities either (A) at a conversion,
exercise or exchange rate or other price that is based upon and/or varies with the trading prices of or quotations for the Common Stock
at any time after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or exchange price that is subject
to being reset at some future date after the initial issuance of such Convertible Securities or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for the Common Stock, or (ii) enters into any agreement
(including, without limitation, an equity line of credit or an “at-the-market” offering) whereby the Company or any Subsidiary
may sell securities at a future determined price (other than standard and customary “preemptive” or “participation”
rights); provided however, that shares of Common Stock issued pursuant to the July EPFA, shall not be considered a Variable Rate Transaction.
Each Buyer shall be entitled to obtain injunctive relief against the Company and its Subsidiaries to preclude any such issuance, which
remedy shall be in addition to any right to collect damages.
27
(o) Participation
Right. At any time on or prior to the eighteen (18) month anniversary of this Agreement, neither the Company nor any of its Subsidiaries
shall, directly or indirectly, effect any Subsequent Placement unless the Company shall have first complied with this Section 4(o).
The Company acknowledges and agrees that the right set forth in this Section 4(o) is a right granted by the Company, separately,
to each Buyer.
(i) At
least five (5) Trading Days prior to any proposed or intended Subsequent Placement, the Company shall deliver to each Buyer a written
notice (each such notice, a “Pre-Notice”), which Pre-Notice shall not contain any information (including, without limitation,
material, non-public information) other than: (A) if the proposed Offer Notice (as defined below) constitutes or contains material, non-public
information, a statement asking whether the Buyer is willing to accept material non-public information or (B) if the proposed Offer Notice
does not constitute or contain material, non-public information, (x) a statement that the Company proposes or intends to effect a Subsequent
Placement, (y) a statement that the statement in clause (x) above does not constitute material, non-public information and (z) a statement
informing such Buyer that it is entitled to receive an Offer Notice (as defined below) with respect to such Subsequent Placement upon
its written request. Upon the written request of a Buyer within one (1) Trading Day after the Company’s delivery to such Buyer of
such Pre-Notice, and only upon a written request by such Buyer, the Company shall promptly, but no later than one (1) Trading Day after
such request, deliver to such Buyer an irrevocable written notice (the “Offer Notice”) of any proposed or intended
issuance or sale or exchange (the “Offer”) of the securities being offered (the “Offered Securities”)
in a Subsequent Placement, which Offer Notice shall (A) identify and describe the Offered Securities, (B) describe the price and other
terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged,
(C) identify the Persons (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (D)
offer to issue and sell to or exchange with such Buyer in accordance with the terms of the Offer such Buyer’s pro rata portion of
20% of the Offered Securities, provided that the number of Offered Securities which such Buyer shall have the right to subscribe for under
this Section 4(o) shall be (x) based on such Buyer’s pro rata portion of the aggregate original principal amount of the Notes purchased
hereunder by all Buyers (the “Basic Amount”), and (y) with respect to each Buyer that elects to purchase its Basic
Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall indicate
it will purchase or acquire should the other Buyers subscribe for less than their Basic Amounts (the “Undersubscription Amount”),
which process shall be repeated until each Buyer shall have an opportunity to subscribe for any remaining Undersubscription Amount.
(ii) To
accept an Offer, in whole or in part, such Buyer must deliver a written notice to the Company prior to the end of the first (1st) Business
Day after such Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such Buyer’s
Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to purchase all of its Basic Amount, the Undersubscription
Amount, if any, that such Buyer elects to purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts
subscribed for by all Buyers are less than the total of all of the Basic Amounts, then each Buyer who has set forth an Undersubscription
Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed for exceed the difference between the total
of all the Basic Amounts and the Basic Amounts subscribed for (the “Available Undersubscription Amount”), each Buyer
who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription
Amount as the Basic Amount of such Buyer bears to the total Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts,
subject to rounding by the Company to the extent it deems reasonably necessary. Notwithstanding the foregoing, if the Company desires
to modify or amend the terms and conditions of the Offer prior to the expiration of the Offer Period, the Company may deliver to each
Buyer a new Offer Notice and the Offer Period shall expire on the first (1st) Business Day after such Buyer’s receipt of such new
Offer Notice.
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(iii) The
Company shall have five (5) Business Days from the expiration of the Offer Period above (A) to offer, issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not been given by a Buyer (the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to the offerees described in
the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest
rates) that are not more favorable to the acquiring Person or Persons or less favorable to the Company than those set forth in the Offer
Notice and (B) to publicly announce (x) the execution of such Subsequent Placement Agreement, and (y) either (I) the consummation of the
transactions contemplated by such Subsequent Placement Agreement or (II) the termination of such Subsequent Placement Agreement, which
shall be filed with the SEC on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein
filed as exhibits thereto.
(iv) In
the event the Company shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified
in Section 4(o)(iii) above), then each Buyer may, at its sole option and in its sole discretion, withdraw its Notice of Acceptance
or reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than
the number or amount of the Offered Securities that such Buyer elected to purchase pursuant to Section 4(o)(ii) above multiplied
by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities the Company actually proposes to issue,
sell or exchange (including Offered Securities to be issued or sold to Buyers pursuant to this Section 4(o) prior to such reduction)
and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Buyer so elects to reduce
the number or amount of Offered Securities specified in its Notice of Acceptance, the Company may not issue, sell or exchange more than
the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Buyers in accordance
with Section 4(o)(i) above.
(v) Upon
the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, such Buyer shall acquire from the Company,
and the Company shall issue to such Buyer, the number or amount of Offered Securities specified in its Notice of Acceptance, as reduced
pursuant to Section 4(o)(iv) above if such Buyer has so elected, upon the terms and conditions specified in the Offer. The purchase
by such Buyer of any Offered Securities is subject in all cases to the preparation, execution and delivery by the Company and such Buyer
of a separate purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to such Buyer and its
counsel.
(vi) Any
Offered Securities not acquired by a Buyer or other Persons in accordance with this Section 4(o) may not be issued, sold or exchanged
until they are again offered to such Buyer under the procedures specified in this Agreement.
(vii) The
Company and each Buyer agree that if any Buyer elects to participate in the Offer, (x) neither the Subsequent Placement Agreement with
respect to such Offer nor any other transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby such Buyer shall be required to agree to any restrictions on trading as to any securities
of the Company or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection
with, any agreement previously entered into with the Company or any instrument received from the Company, (y) representation and warranties
of a Buyer in the Subsequent Placement Documents shall not be more restrictive than those of the Buyers in this Agreement (other than
such changes as necessary to comply with applicable law, rules and regulations, the manner of sale of such security in such Subsequent
Placement and/or the type of such security to be sold in such Subsequent Placement) and (z) any registration rights set forth in such
Subsequent Placement Documents shall be similar in all material respects to the registration rights contained in the Registration Rights
Agreement.
(viii) Notwithstanding
anything to the contrary in this Section 4(o) and unless otherwise agreed to by such Buyer, the Company shall either confirm in writing
to such Buyer that the transaction with respect to the Subsequent Placement has been abandoned or shall publicly disclose its intention
to issue the Offered Securities, in either case, in such a manner such that such Buyer will not be in possession of any material, non-public
information, by the tenth (10th) Business Day following delivery of the Offer Notice. If by such tenth (10th) Business
Day, no public disclosure regarding a transaction with respect to the Offered Securities has been made,
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and no notice regarding the abandonment
of such transaction has been received by such Buyer, such transaction shall be deemed to have been abandoned and such Buyer shall not
be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries. Should the Company decide
to pursue such transaction with respect to the Offered Securities, the Company shall provide such Buyer with another Offer Notice and
such Buyer will again have the right of participation set forth in this Section 4(o). The Company shall not be permitted to deliver more
than one such Offer Notice to such Buyer in any thirty (30) day period, except as expressly contemplated by the last sentence of Section
4(o)(ii).
(ix) The
restrictions contained in this Section 4(o) shall not apply in connection with the issuance of any Excluded Securities. The Company shall
not circumvent the provisions of this Section 4(o) by providing terms or conditions to one Buyer that are not provided to all.
(p) Dilutive
Issuances. During the Covenant Period, the Company shall not, in any manner, enter into or affect any Dilutive Issuance (as defined
in the Notes) if the effect of such Dilutive Issuance is to cause the Company to be required to issue upon conversion of any Notes any
shares of Common Stock in excess of that number of shares of Common Stock which the Company may issue upon conversion of the Notes without
breaching the Company’s obligations under the rules or regulations of the Principal Market.
(q) Passive
Foreign Investment Company. The Company shall conduct its business, and shall cause its Subsidiaries to conduct their respective businesses,
in such a manner as will ensure that the Company will not be deemed to constitute a passive foreign investment company within the meaning
of Section 1297 of the Code.
(r) Restriction
on Redemption and Cash Dividends. During the Covenant Period, the Company shall not, directly or indirectly, redeem, or declare or
pay any cash dividend or distribution on, any securities of the Company without the prior express written consent of the Buyers.
(s) Corporate
Existence. During the Covenant Period, the Company shall not be party to any Fundamental Transaction (as defined in the Notes) unless
the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes.
(t) Termination
of Existing Agreements. Promptly following the execution of this Agreement, the Company shall terminate any agreements in effect of
the date hereof with respect to or that could result in a Variable Rate Transaction pursuant to the terms of such agreements. The Company
shall notify the Investor within one day of the effective termination of any such agreements.
(u) Conversion
Procedures. Each of the form of Conversion Notice (as defined in the Notes) included in the Notes set forth the totality of the procedures
required of the Buyers in order to convert the Notes. Except as provided in Section 5(d), no additional legal opinion, other information
or instructions shall be required of the Buyers to convert their Notes. The Company shall honor conversions of the Notes and shall deliver
the Conversion Shares in accordance with the terms, conditions and time periods set forth in the Notes.
(v) Collateral
Agent. Each Buyer hereby (i) appoints [•], as the collateral agent hereunder and under the other Security Documents (in such
capacity, the “Collateral Agent”), and (ii) authorizes the Collateral Agent (and its officers, directors, employees
and agents) to take such action on such Buyer’s behalf in accordance with the terms hereof and thereof. The Collateral Agent shall
not have, by reason hereof or any of the other Security Documents, a fiduciary relationship in respect of any Buyer. Neither the Collateral
Agent nor any of its officers, directors, employees or agents shall have any liability to any Buyer for any action taken or omitted to
be taken in connection hereof or any other Security Document except to the extent caused by its own gross negligence or willful misconduct,
and each Buyer agrees to defend, protect, indemnify and hold harmless the Collateral Agent and all of its officers, directors, employees
and agents (collectively, the “Collateral Agent Indemnitees”) from and against any losses, damages, liabilities, obligations,
penalties, actions, judgments, suits, fees, costs and expenses (including, without limitation, reasonable attorneys’ fees,
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costs
and expenses) incurred by such Collateral Agent Indemnitee, whether direct, indirect or consequential, arising from or in connection with
the performance by such Collateral Agent Indemnitee of the duties and obligations of Collateral Agent pursuant hereto or any of the Security
Documents. The Collateral Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to
refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Holders,
and such instructions shall be binding upon all holders of Notes; provided, however, that the Collateral Agent shall not be required to
take any action which, in the reasonable opinion of the Collateral Agent, exposes the Collateral Agent to liability or which is contrary
to this Agreement or any other Transaction Document or applicable law. The Collateral Agent shall be entitled to rely upon any written
notices, statements, certificates, orders or other documents or any telephone message believed by it in good faith to be genuine and correct
and to have been signed, sent or made by the proper Person, and with respect to all matters pertaining to this Agreement or any of the
other Transaction Documents and its duties hereunder or thereunder, upon advice of counsel selected by it.
(w) Successor
Collateral Agent.
(i) The
Collateral Agent may resign from the performance of all its functions and duties hereunder and under the other Transaction Documents at
any time by giving at least ten (10) Business Days’ prior written notice to the Company and each holder of Notes. Such resignation
shall take effect upon the acceptance by a successor Collateral Agent of appointment pursuant to clauses (ii) and (iii) below or as otherwise
provided below. If at any time the Collateral Agent (together with its affiliates) beneficially owns less than $100,000 in aggregate principal
amount of Notes, the Required Holders may, by written consent, remove the Collateral Agent from all its functions and duties hereunder
and under the other Transaction Documents.
(ii) Upon
any such notice of resignation or removal, the Required Holders shall appoint a successor collateral agent. Upon the acceptance of any
appointment as Collateral Agent hereunder by a successor agent, such successor collateral agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the collateral agent, and the Collateral Agent shall be discharged from its
duties and obligations under this Agreement and the other Transaction Documents. After the Collateral Agent’s resignation or removal
hereunder as the collateral agent, the provisions of this Section 4(w) shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was the Collateral Agent under this Agreement and the other Transaction Documents.
(iii) If
a successor collateral agent shall not have been so appointed within ten (10) Business Days of receipt of a written notice of resignation
or removal, the Collateral Agent shall then appoint a successor collateral agent who shall serve as the Collateral Agent until such time,
if any, as the Required Holders appoint a successor collateral agent as provided above.
(iv) In
the event that a successor Collateral Agent is appointed pursuant to the provisions of this Section 4(w) that is not a Buyer or an affiliate
of any Buyer (or the Required Holders or the Collateral Agent (or its successor), as applicable, notify the Company that they or it wants
to appoint such a successor Collateral Agent pursuant to the terms of this Section 4(w)), the Company and each Subsidiary thereof covenants
and agrees to promptly take all actions reasonably requested by the Required Holders or the Collateral Agent (or its successor), as applicable,
from time to time, to secure a successor Collateral Agent satisfactory to the requesting part(y)(ies), in their sole discretion, including,
without limitation, by paying all reasonable and customary fees and expenses of such successor Collateral Agent, by having the Company
and each Subsidiary thereof agree to indemnify any successor Collateral Agent pursuant to reasonable and customary terms and by each of
the Company and each Subsidiary thereof executing a collateral agency agreement or similar agreement and/or any amendment to the Security
Documents reasonably requested or required by the successor Collateral Agent.
(x) Regulation
M. The Company will not take any action prohibited by Regulation M under the 1934 Act, in connection with the distribution of the
Securities contemplated hereby.
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(y) General
Solicitation. None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act) or any person acting on behalf
of the Company or such affiliate will solicit any offer to buy or offer or sell the Securities by means of any form of general solicitation
or general advertising within the meaning of Regulation D, including: (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast over television or radio; and (ii) any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(z) Integration.
None of the Company, any of its affiliates (as defined in Rule 501(b) under the 1933 Act), or any person acting on behalf of the Company
or such affiliate will sell, offer for sale, or solicit offers to buy or otherwise negotiate in respect of any security (as defined in
the 1933 Act) which will be integrated with the sale of the Securities in a manner which would require the registration of the Securities
under the 1933 Act or require shareholder approval under the rules and regulations of the Principal Market and the Company will take all
action that is appropriate or necessary to assure that its offerings of other securities will not be integrated for purposes of the 1933
Act or the rules and regulations of the Principal Market, with the issuance of Securities contemplated hereby.
(aa) Notice of Disqualification
Events. The Company will notify the Buyers in writing, prior to each Closing Date of (i) any Disqualification Event relating to any
Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer
Covered Person. (bb) Subsidiary Guarantee. During the Covenant Period, upon any entity becoming a direct,
or indirect, Subsidiary of the Company, the Company shall cause each such Subsidiary to become party to the Guaranty by executing a joinder
to the Guaranty reasonably satisfactory in form and substance to the Required Holders.(cc) No Net Short Position. Each Buyer hereby
agrees solely with the Company, severally and not jointly, and not with any other Buyer, for so long as such Buyer owns any Notes, such
Buyer shall not maintain a Net Short Position (as defined below). For purposes hereof, a “Net Short Position” by a person
means a position whereby such person has executed one or more sales of shares of Common Stock that is marked as a short sale (but not
including any sale marked “short exempt”) and that is executed at a time when such Buyer has no equivalent offsetting long
position in the Common Stock (or is deemed to have a long position hereunder or otherwise in accordance with Regulation SHO of the 1934
Act); provided, that, for purposes of such calculations, any short sales either (x) consummated at a price greater than or equal to (A)
the Conversion Price, (y) that is a result of a bona-fide trading error on behalf of such Buyer (or its affiliates) or (z) that would
otherwise be marked as a “long” sale, but for the occurrence of a Conversion Failure (as defined in the Notes), an Equity
Conditions Failure (as defined in the Notes) and/or any other breach by the Company (or its affiliates or agents, including, without
limitation, the Transfer Agent) of any Transaction Document, in each case, shall be excluded from such calculations. For purposes of
determining whether a Buyer has an equivalent offsetting “long” position in the Common Stock, (A) all shares of Common Stock
that are owned by such Buyer shall be deemed held “long” by such Buyer, (B) all shares of Common Stock that would be issuable
upon conversion or exercise in full of all Securities issuable to such Buyer or then held by such Buyer, as applicable (assuming that
such Securities were then fully convertible or exercisable, notwithstanding any provisions to the contrary, and giving effect to any
conversion or exercise price adjustments that would take effect given only the passage of time) shall be deemed to be held long by such
Buyer, and (C) at any other time the Company is required (or has elected (or is deemed to have elected)) to issue shares of Common Stock
to such Buyer pursuant to the terms of the Notes, any shares of Common Stock issued or issuable to such Buyer (or its designee, if applicable)
in connection therewith shall be deemed held “long” by such Buyer from and after the date that is one (1) Trading Day prior
to the deadline for delivery of such shares of Common Stock to such Buyer, as set forth in the Notes, until such time as such Buyer shall
no longer beneficially own such shares of Common Stock.(dd) Closing Documents. On or prior to fourteen (14) calendar days after each
Closing Date, the Company agrees to deliver, or cause to be delivered, to each Buyer and Sullivan & Worcester LLP a complete closing
set of the executed Transaction Documents, Securities and any other document required to be delivered to any party pursuant to Section 7
hereof or otherwise.(ee) Stockholder Approval. The Company shall provide each stockholder entitled to vote at a meeting of stockholders
of the Company (the “Stockholder Meeting”), which shall be promptly called and held not later than fifty (50) calendar
days after the Closing Date (the “Stockholder Meeting Deadline”), a proxy statement, in each case, in a form reasonably
acceptable to the Lead Buyer and Sullivan & Worcester LLP, at the expense of the Company, with the Company obligated to reimburse
the expenses of Sullivan & Worcester LLP incurred in connection therewith; provided, however, if the Company has filed and mailed
its definitive proxy statement within thirty (30) calendar days after the Closing Date, then the Company may request an extension of
the Stockholder Meeting Deadline to a date no later than ten (10) calendar days following the Stockholder Meeting Deadline,
32
which the
Lead Buyer may approve in its sole discretion. The proxy statement, if any, shall solicit each of the Company’s stockholders’
affirmative vote at the Stockholder Meeting for approval of resolutions (“Stockholder Resolutions”) providing for
(i) the approval of the issuance of all of the Securities in compliance with the rules and regulations of the Principal Market (without
regard to any limitations on conversion set forth in the Notes, assuming all Second Notes and all Additional Notes have been issued hereunder),
(ii) the approval to effect one or more reverse stock splits of the Common Stock at a ratio within the range of 5-for-1 up to 250-for-1
(the “Reverse Stock Split Authority”), and (iii) the approval of an amendment to the Articles of Incorporation to
increase the authorized number of shares of Common Stock to 1,000,000,000 (such affirmative approvals being referred to herein as the
“Stockholder Approval”, and the date such Stockholder Approval is obtained, the “Stockholder Approval Date”),
and the Company shall use its reasonable best efforts to solicit its stockholders’ approval of such resolutions and to cause the
board of directors of the Company to recommend to the stockholders that they approve such resolutions. The Company shall be obligated
to seek to obtain the Stockholder Approval by the Stockholder Meeting Deadline. If, despite the Company’s reasonable best efforts
the Stockholder Approval is not obtained by such Stockholder Meeting Deadline, the Company shall adjourn and reconvene the Stockholder
Meeting at least as often as every seventy five (75) calendar days thereafter until such Stockholder Approval is obtained, but in no
event later than the three hundred and sixty-fifth (365th) calendar day after the Closing Date. Notwithstanding the foregoing,
if the Company is able to obtain the written consent of holders of a majority of the shares of its issued and outstanding Common Stock
to obtain the Stockholder Approval (the “Stockholder Consent”), the Company may satisfy its obligations under this
Section 4(ee) by obtaining such consent and submitting for filing with the Commission a Preliminary Information Statement on Schedule
14C no later than 10 days following the date of this Agreement, followed by a Definitive Information Statement on Schedule 14C no later
than the timeline for such filing prescribed by the Exchange Act; provided however, that if the Company receives a notification from
the Principal Market that the Stockholder Consent must be modified, then the Company shall use its best efforts to provide a new Stockholder
Consent.
(ff) Change in Transfer Agent.
No later than the thirtieth (30th) calendar day immediately after the date hereof (such date, the “New Transfer Agent Deadline”),
the Company shall (i) terminate its engagement of Computershare, Inc. as its transfer agent and engage a new transfer agent that is acceptable
to the Lead Buyer at the Lead Buyer’s sole discretion, as its new transfer agent, (the “New Transfer Agent”)
(ii) provide written notice to the Buyers of such engagement, and (iii) issue Irrevocable Transfer Agent Instructions (as defined below)
to the New Transfer Agent, in a form acceptable to the Lead Buyer, at the Lead Buyer’s sole discretion.
5. REGISTER;
TRANSFER AGENT INSTRUCTIONS; LEGEND.
(a) Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate by notice
to each holder of Securities), a register for the Notes in which the Company shall record the name and address of the Person in whose
name the Notes have been issued (including the name and address of each transferee), the principal amount of the Notes held by such Person
and the number of Conversion Shares issuable pursuant to the terms of the Notes. The Company shall keep the register open and available
at all times during business hours for inspection of any Buyer or its legal representatives.
(b) Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent and any subsequent transfer agent (as applicable,
the “Transfer Agent”) in a form acceptable to each of the Buyers (the “Irrevocable Transfer Agent Instructions”)
to issue certificates or credit shares to the applicable balance accounts at The Depository Trust Company (“DTC”),
registered in the name of each Buyer or its respective nominee(s), for the Conversion Shares and/or Interest Shares in such amounts as
specified from time to time by each Buyer to the Company upon conversion of or payment of interest under the Notes. The Company represents
and warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b), and stop
transfer instructions to give effect to Section 2(g) hereof, will be given by the Company to its transfer agent with respect to the Securities,
and that the Securities shall otherwise be freely transferable on the books and records of the Company, as applicable, to the extent provided
in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities in accordance
with Section 2(g), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue one or more certificates
or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified by such Buyer to effect
such sale, transfer or assignment. In the event that such sale,
33
assignment or transfer involves Conversion Shares and/or Interest Shares
sold, assigned or transferred pursuant to an effective registration statement or in compliance with Rule 144, the transfer agent shall
issue such shares to such Buyer, assignee or transferee (as the case may be) without any restrictive legend in accordance with Section 5(d)
below. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and agrees,
in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall be entitled,
in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate issuance and
transfer, without the necessity of showing economic loss and without any bond or other security being required. The Company shall cause
its counsel to issue the legal opinion referred to in the Irrevocable Transfer Agent Instructions to the Company’s transfer agent
on each Effective Date (as defined in the Registration Rights Agreement). Any fees (with respect to the transfer agent, counsel to the
Company or otherwise) associated with the issuance of such opinion or the removal of any legends on any of the Securities shall be borne
by the Company.
(c) Legends.
Each Buyer understands that the Securities have been issued (or will be issued in the case of the Conversion Shares and the Interest Shares)
pursuant to an exemption from registration or qualification under the 1933 Act and applicable state securities laws, and except as set
forth below, the Securities shall bear any legend as required by the “blue sky” laws of any state and a restrictive legend
in substantially the following form (and a stop-transfer order may be placed against transfer of such share certificates):
[NEITHER THE ISSUANCE AND SALE OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN][THE SECURITIES REPRESENTED BY
THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES
MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE
144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.
(d) Removal
of Legends. Certificates evidencing Securities shall not be required to contain the legend set forth in Section 5(c) above or
any other legend (i) while a registration statement (including a Registration Statement) covering the resale of such Securities is effective
under the 1933 Act, (ii) following any sale of such Securities pursuant to Rule 144 (assuming the transferor is not an affiliate of the
Company), (iii) if such Securities are eligible to be sold, assigned or transferred under Rule 144 (provided that a Buyer provides the
Company with reasonable assurances that such Securities are eligible for sale, assignment or transfer under Rule 144 which shall not include
an opinion of Buyer’s counsel), (iv) in connection with a sale, assignment or other transfer (other than under Rule 144), provided
that such Buyer provides the Company with an opinion of counsel to such Buyer, in a generally acceptable form, to the effect that such
sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act or (v)
if such legend is not required under applicable requirements of the 1933 Act (including, without limitation, controlling judicial interpretations
and pronouncements issued by the SEC). If a legend is not required pursuant to the foregoing, the Company shall no later than one (1)
Trading Day (or such earlier date as required pursuant to the 1934 Act or other applicable law, rule or regulation for the settlement
of a trade initiated on the date such Buyer delivers such legended certificate representing such Securities to the Company) following
the delivery by a Buyer to the Company or the transfer agent (with notice to the Company) of a legended certificate representing such
Securities (endorsed or with share powers attached, signatures guaranteed, and otherwise in form necessary to affect the reissuance and/or
transfer, if applicable), together with any other deliveries from such Buyer as may be required above in this Section 5(d), as directed
by such Buyer, either: (A) provided that the Company’s transfer agent is participating in the DTC Fast Automated Securities Transfer
Program (“FAST”) and such Securities are Conversion Shares and/or Interest Shares,
34
credit the aggregate number of shares
of Common Stock to which such Buyer shall be entitled to such Buyer’s or its designee’s balance account with DTC through its
Deposit/Withdrawal at Custodian system or (B) if the Company’s transfer agent is not participating in FAST, issue and deliver (via
reputable overnight courier) to such Buyer, a certificate representing such Securities that is free from all restrictive and other legends,
registered in the name of such Buyer or its designee (the date by which such credit is so required to be made to the balance account of
such Buyer’s or such Buyer’s designee with DTC or such certificate is required to be delivered to such Buyer pursuant to the
foregoing is referred to herein as the “Required Delivery Date”, and the date such shares of Common Stock are actually
delivered without restrictive legend to such Buyer or such Buyer’s designee with DTC, as applicable, the “Share Delivery
Date”). The Company shall be responsible for any transfer agent fees or DTC fees with respect to any issuance of Securities
or the removal of any legends with respect to any Securities in accordance herewith.
(e) Failure
to Timely Deliver; Buy-In. If the Company fails, for any reason or for no reason, to issue and deliver (or cause to be delivered)
to a Buyer (or its designee) by the Required Delivery Date, either (I) if the Transfer Agent is not participating in FAST, a certificate
for the number of Conversion Shares and/or Interest Shares to which such Buyer is entitled and register such Conversion Shares and/or
Interest Shares on the Company’s share register or, if the Transfer Agent is participating in FAST, to credit the balance account
of such Buyer or such Buyer’s designee with DTC for such number of Conversion Shares and/or Interest Shares submitted for legend
removal by such Buyer pursuant to Section 5(d) above or (II) if the Registration Statement covering the resale of the Conversion Shares
and/or Interest Shares submitted for legend removal by such Buyer pursuant to Section 5(d) above (the “Unavailable Shares”)
is not available for the resale of such Unavailable Shares and the Company fails to promptly, but in no event later than as required pursuant
to the Registration Rights Agreement (x) so notify such Buyer and (y) deliver the Conversion Shares and/or Interest Shares, electronically
without any restrictive legend by crediting such aggregate number of Conversion Shares and/or Interest Shares submitted for legend removal
by such Buyer pursuant to Section 5(d) above to such Buyer’s or its designee’s balance account with DTC through its Deposit/Withdrawal
At Custodian system (the event described in the immediately foregoing clause (II) is hereinafter referred as a “Notice Failure”
and together with the event described in clause (I) above, a “Delivery Failure”), then, in addition to all other remedies
available to such Buyer, the Company shall pay in cash to such Buyer on each day after the Share Delivery Date and during such Delivery
Failure an amount equal to 2% of the product of (A) the sum of the number of shares of Common Stock not issued to such Buyer on or prior
to the Required Delivery Date and to which such Buyer is entitled, and (B) any trading price of the Common Stock selected by such Buyer
in writing as in effect at any time during the period beginning on the date of the delivery by such Buyer to the Company of the applicable
Conversion Shares and/or Interest Shares and ending on the applicable Share Delivery Date. In addition to the foregoing, if on or prior
to the Required Delivery Date either (I) if the Transfer Agent is not participating in FAST, the Company shall fail to issue and deliver
a certificate to a Buyer and register such shares of Common Stock on the Company’s share register or, if the Transfer Agent is participating
in FAST, credit the balance account of such Buyer or such Buyer’s designee with DTC for the number of shares of Common Stock to
which such Buyer submitted for legend removal by such Buyer pursuant to Section 5(d) above (ii) below or (II) a Notice Failure occurs,
and if on or after such Trading Day such Buyer purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by such Buyer of shares of Common Stock submitted for legend removal by such Buyer pursuant to Section 5(d)
above that such Buyer is entitled to receive from the Company (a “Buy-In”), then the Company shall, within one (1)
Trading Day after such Buyer’s request and in such Buyer’s discretion, either (i) pay cash to such Buyer in an amount equal
to such Buyer’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any, for the shares of
Common Stock so purchased) (the “Buy-In Price”), at which point the Company’s obligation to so deliver such certificate
or credit such Buyer’s balance account shall terminate and such shares shall be cancelled, or (ii) promptly honor its obligation
to so deliver to such Buyer a certificate or certificates or credit the balance account of such Buyer or such Buyer’s designee with
DTC representing such number of shares of Common Stock that would have been so delivered if the Company timely complied with its obligations
hereunder and pay cash to such Buyer in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number
of shares of Conversion Shares and/or Interest Shares that the Company was required to deliver to such Buyer by the Required Delivery
Date multiplied by (B) the lowest Closing Sale Price (as defined in the Notes) of the shares of Common Stock on any Trading Day during
the period commencing on the date of the delivery by such Buyer to the Company of the applicable Conversion Shares and/or Interest Shares
and ending on the date of such delivery and payment under this clause (ii). Nothing shall limit such Buyer’s right to pursue any
other remedies available to it hereunder, at law or in equity, including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock (or to
electronically deliver such shares of Common Stock) as required pursuant to the terms hereof. Notwithstanding anything herein to the contrary,
with respect to any given Notice Failure and/or Delivery Failure, this Section 5(e) shall not apply to the applicable Buyer the extent
the Company has already paid such amounts in full to such Buyer with respect to such Notice Failure and/or Delivery Failure, as applicable,
pursuant to the analogous sections of the Note held by such Buyer.
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(f) FAST
Compliance. While any Notes remain outstanding, the Company shall maintain a transfer agent that participates in FAST.
6. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
(a) The
obligation of the Company hereunder to issue and sell the Initial Notes to each Buyer at the Initial Closing is subject to the satisfaction,
at or before the Initial Closing Date, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such
Buyer and each other Buyer shall have delivered to the Company the Initial Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(g)) for the Initial Note being purchased by such Buyer at the Initial Closing by wire transfer of
immediately available funds in accordance with the Initial Flow of Funds Letter (as defined below).
(iii) The
representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the
Initial Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Initial Closing Date.
(b) The
obligation of the Company hereunder to issue and sell the Second Notes to each Buyer at the Second Closing is subject to the satisfaction,
at or before the Second Closing Date, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice thereof:
(i) Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
(ii) Such
Buyer and each other Buyer shall have delivered to the Company the Second Purchase Price (less, in the case of any Buyer, the amounts
withheld pursuant to Section 4(g)) for the Second Note being purchased by such Buyer at the Second Closing by wire transfer of immediately
available funds in accordance with the Second Flow of Funds Letter (as defined below).
(iii) The
representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the
Second Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Second Closing Date.
(c) The
obligation of the Company hereunder to issue and sell an Additional Note to an applicable Buyer at an Additional Closing is subject to
the satisfaction, at or before such applicable Additional Closing Date, of each of the following conditions, provided that these conditions
are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion by providing such applicable
Buyer with prior written notice thereof:
(i) Such
Buyer shall have executed each of the other Transaction Documents to which it is a party and delivered the same to the Company.
36
(ii) Such
Buyer shall have delivered to the Company the Additional Purchase Price (less, in the case of such Buyer, the amounts withheld pursuant
to Section 4(g)) for the Additional Note being purchased by such Buyer at the Additional Closing by wire transfer of immediately
available funds in accordance with the Additional Flow of Funds Letter (as defined below).
(iii) The
representations and warranties of such Buyer shall be true and correct in all material respects as of the date when made and as of the
Additional Closing Date as though originally made at that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such specific date), and such Buyer shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by such
Buyer at or prior to the Additional Closing Date.
7. CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.
(a) The
obligation of each Buyer hereunder to purchase its Initial Note at the Initial Closing is subject to the satisfaction, at or before the
Initial Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and
may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The
Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents
to which it is a party and the Company shall have duly executed and delivered to such Buyer an Initial Note in such original principal
amount as is set forth across from such Buyer’s name in column (3) of the Schedule of Buyers as being purchased by such Buyer at
the Initial Closing pursuant to this Agreement.
(ii) Such
Buyer shall have received the legal opinion of Fleming PLLC, the Company’s counsel, dated as of the Initial Closing Date, in the
form acceptable to such Buyer.
(iii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer,
which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.
(iv) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries
in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of
formation as of a date within ten (10) days of the Initial Closing Date.
(v) The
Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification as a
foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company
and each Subsidiary conducts business and is required to so qualify, as of a date within ten (10) days of the Initial Closing Date.
(vi) The
Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Secretary of State of
the State of Nevada within ten (10) days of the Initial Closing Date.
(vii) Each
Subsidiary shall have delivered to such Buyer a certified copy of its certificate of incorporation (or such equivalent organizational
document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation within
ten (10) days of the Initial Closing Date.
37
(viii) The
Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary
or the Chief Financial Officer of the Company and the manager or other officer of each Subsidiary and dated as of the Initial Closing
Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s and each Subsidiary’s board
of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation, as amended, of the Company and the organizational
documents of each Subsidiary and (iii) the bylaws (or equivalent governing document) of each Subsidiary, each as in effect at the Initial
Closing.
(ix) Each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Initial Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Initial Closing Date.
Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Initial Closing
Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such
Buyer.
(x) The
Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of Common
Stock outstanding on the Initial Closing Date immediately prior to the Initial Closing.
(xi) The
Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended,
as of the Initial Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC
or the Principal Market have been threatened, as of the Initial Closing Date, either (I) in writing by the SEC or the Principal Market
or (II) by falling below the minimum maintenance requirements of the Principal Market, including the minimum stockholders’ equity
requirement pursuant to Nasdaq Listing Rule 5550(b)(1).
(xii) The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal Market, if any.
(xiii) No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by
the Transaction Documents.
(xiv) Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.
(xv) The
Company shall have submitted a Listing of Additional Shares Notification Form to the Principal Market with respect to the Initial Conversion
Shares.
(xvi) The
Company shall have publicly disclosed in a Current Report on Form 8-K that to the Company’s belief (i) the transaction with Dream
America Marketing Services, Ltd pursuant to that certain Share Purchase Agreement, dated as of June 26, 2026, has increased the Company’s
stockholders’ equity such that they are in compliance the stockholders’ equity requirement pursuant to Nasdaq Listing Rule
5550(b)(1), and (ii) that the Company has positive stockholders’ equity of at least $3 million.
(xvii) The
Company shall have converted into equity at least $386,364 in outstanding merchant cash advances.
38
(xviii) In
accordance with the terms of the Security Documents, the Company shall have delivered to the Collateral Agent (A) original certificates
(if any) (I) representing the Subsidiaries’ shares of share capital to the extent such subsidiary is a corporation or otherwise
has certificated equity and (II) representing all other equity interests and all promissory notes required to be pledged thereunder, in
each case, accompanied by undated share powers and allonges executed in blank and other proper instruments of transfer and (B) appropriate
financing statements on Form UCC-1 to be duly filed in such office or offices as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created by each Security Document (the “Perfection Certificate”).
(xix)
Within two (2) Business Days prior to the Initial Closing, the Company shall have delivered or caused to be delivered to each Buyer and
the Collateral Agent (A) certified copies of requests for copies of information on Form UCC-11, listing all effective financing statements
which name as debtor the Company or any of its Subsidiaries and which are filed in such office or offices as may be necessary or, in the
opinion of the Collateral Agent or the Buyers, desirable to perfect the security interests purported to be created by the Security Agreement,
together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Collateral Agent, shall
cover any of the Collateral (as defined in the Security Agreement), and the results of searches for any tax Lien and judgment Lien filed
against such Person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent and the Buyers, shall
not show any such Liens; and (B) a perfection certificate, duly completed and executed by the Company and each of its Subsidiaries, in
form and substance satisfactory to the Buyers.
(xx) The
Collateral Agent shall have received the Security Agreement, duly executed by the Company and each of its Subsidiaries, together with
any the original share certificates representing all of the equity interests and all promissory notes required to be pledged thereunder,
accompanied by undated share powers and allonges executed in blank and other proper instruments of transfer.
(xxi) Such
Buyer shall have received a letter on the letterhead of the Company (the “Initial Flow of Funds Letter”) duly executed
by the Chief Executive Officer or Chief Financial Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer
instructions of the Company.
(xxii) The
Company shall have delivered to such Buyers (or made available through the EDGAR system) the audited financial statements of the Company
and its Subsidiaries for the fiscal year ended December 31, 2025.
(xxiii) The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably request.
(b) The
obligation of each Buyer hereunder to purchase its Second Note at the Second Closing is subject to the satisfaction, at or before the
Second Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit and may
be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
(i) The
Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents
to which it is a party and the Company shall have duly executed and delivered to such Buyer an Second Note in such original principal
amount as is set forth across from such Buyer’s name in column (4) of the Schedule of Buyers as being purchased by such Buyer at
the Second Closing pursuant to this Agreement.
(ii) Such
Buyer shall have received the legal opinion of Fleming PLLC, the Company’s counsel, dated as of the Second Closing Date, in the
form acceptable to such Buyer.
39
(iii) The
Company shall have engaged the New Transfer Agent no later than the New Transfer Agent Deadline and provided evidence of such engagement
to such Buyer.
(iv) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer,
which instructions shall have been delivered to and acknowledged in writing by the Company’s New Transfer Agent.
(v) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries
in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of
formation as of a date within ten (10) days of the Second Closing Date.
(vi) The
Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification as a
foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company
and each Subsidiary conducts business and is required to so qualify, as of a date within ten (10) days of the Second Closing Date.
(vii) The
Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Secretary of State of
the State of Nevada within ten (10) days of the Second Closing Date.
(viii) Each
Subsidiary shall have delivered to such Buyer a certified copy of its certificate of incorporation (or such equivalent organizational
document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation within
ten (10) days of the Second Closing Date.
(ix) The
Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary
or the Chief Financial Officer of the Company and the manager or other officer of each Subsidiary and dated as of the Second Closing Date,
as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s and each Subsidiary’s board of directors
in a form reasonably acceptable to such Buyer, (ii) the Articles of Incorporation, as amended, of the Company and the organizational documents
of each Subsidiary and (iii) the bylaws (or equivalent governing document) of each Subsidiary, each as in effect at the Second Closing.
(x) Each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Second Closing Date
as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be true
and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Second Closing Date.
Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Second Closing
Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable to such
Buyer.
(xi) The
Company shall have delivered to such Buyer a letter from the Company’s New Transfer Agent certifying the number of shares of Common
Stock outstanding on the Second Closing Date immediately prior to the Second Closing.
(xii) The
Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended,
as of the Second Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC
or the Principal Market have been threatened, as of the Second Closing Date, either (I) in writing by the SEC or the Principal Market
or (II) by falling below the minimum maintenance requirements of the Principal Market, including the minimum stockholders’ equity
requirement pursuant to Nasdaq Listing Rule 5550(b)(1).
40
(xiii) The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal Market, if any.
(xiv) No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by
the Transaction Documents.
(xv) Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.
(xvi) The
Company shall have submitted a Listing of Additional Shares Notification Form to the Principal Market with respect to the Second Conversion
Shares.
(xvii) In
accordance with the terms of the Security Documents, the Company shall have delivered to the Collateral Agent (A) original certificates
(if any) (I) representing the Subsidiaries’ shares of share capital to the extent such subsidiary is a corporation or otherwise
has certificated equity and (II) representing all other equity interests and all promissory notes required to be pledged thereunder, in
each case, accompanied by undated share powers and allonges executed in blank and other proper instruments of transfer and (B) appropriate
financing statements on Form UCC-1 to be duly filed in such office or offices as may be necessary or, in the opinion of the Collateral
Agent, desirable to perfect the security interests purported to be created by each Security Document (the “Perfection Certificate”).
(xviii)
Within two (2) Business Days prior to the Second Closing, the Company shall have delivered or caused to be delivered to each Buyer and
the Collateral Agent (A) certified copies of requests for copies of information on Form UCC-11, listing all effective financing statements
which name as debtor the Company or any of its Subsidiaries and which are filed in such office or offices as may be necessary or, in the
opinion of the Collateral Agent or the Buyers, desirable to perfect the security interests purported to be created by the Security Agreement,
together with copies of such financing statements, none of which, except as otherwise agreed in writing by the Collateral Agent, shall
cover any of the Collateral (as defined in the Security Agreement), and the results of searches for any tax Lien and judgment Lien filed
against such Person or its property, which results, except as otherwise agreed to in writing by the Collateral Agent and the Buyers, shall
not show any such Liens; and (B) a perfection certificate, duly completed and executed by the Company and each of its Subsidiaries, in
form and substance satisfactory to the Buyers.
(xix) The
Collateral Agent shall have received the Security Agreement, duly executed by the Company and each of its Subsidiaries, together with
any the original share certificates representing all of the equity interests and all promissory notes required to be pledged thereunder,
accompanied by undated share powers and allonges executed in blank and other proper instruments of transfer.
(xx) Such
Buyer shall have received a letter on the letterhead of the Company (the “Second Flow of Funds Letter”) duly executed
by the Chief Executive Officer or Chief Financial Officer of the Company, setting forth the wire amounts of each Buyer and the wire transfer
instructions of the Company.
(xxi) The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably request.
(c) The
obligation of any given Buyer hereunder to purchase its Additional Note at an Additional Closing is subject to the satisfaction, at or
before such applicable Additional Closing Date, of each of the following conditions, provided that these conditions are for such Buyer’s
sole benefit and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:
41
(i) The
Company and each Subsidiary (as the case may be) shall have duly executed and delivered to such Buyer each of the Transaction Documents
to which it is a party and the Company shall have duly executed and delivered to such Buyer an Additional Note in such original principal
amount as is set forth across from such Buyer’s name in column (5) of the Schedule of Buyers as being purchased by such Buyer at
the Additional Closing pursuant to this Agreement.
(ii) Such
Buyer shall have received the legal opinion of Fleming PLLC, the Company’s counsel, dated as of the Additional Closing Date, in
the form acceptable to such Buyer.
(iii) The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form acceptable to such Buyer,
which instructions shall have been delivered to and acknowledged in writing by the Company’s New Transfer Agent.
(iv) The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of its Subsidiaries
in each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such jurisdiction of
formation as of a date within ten (10) days of the Additional Closing Date.
(v) The
Company shall have delivered to such Buyer a certificate evidencing the Company’s and each Subsidiary’s qualification as a
foreign corporation and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company
and each Subsidiary conducts business and is required to so qualify, as of a date within ten (10) days of the Additional Closing Date.
(vi) The
Company shall have delivered to such Buyer a certified copy of the Articles of Incorporation as certified by the Secretary of State of
the State of Nevada within ten (10) days of the Additional Closing Date.
(vii) Each
Subsidiary shall have delivered to such Buyer a certified copy of its certificate of incorporation (or such equivalent organizational
document) as certified by the Secretary of State (or comparable office) of such Subsidiary’s jurisdiction of incorporation within
ten (10) days of the Additional Closing Date.
(viii) The
Company and each Subsidiary shall have delivered to such Buyer a certificate, in the form acceptable to such Buyer, executed by the Secretary
or the Chief Financial Officer of the Company and each Subsidiary and dated as of the Additional Closing Date, as to (i) the resolutions
consistent with Section 3(b) as adopted by the Company’s and each Subsidiary’s board of directors in a form reasonably
acceptable to such Buyer, (ii) the Articles of Incorporation, as amended, of the Company and the organizational documents of each Subsidiary
and (iii) the bylaws (or equivalent governing document) of each Subsidiary, each as in effect at the Additional Closing.
(ix) Each
and every representation and warranty of the Company shall be true and correct as of the date when made and as of the Additional Closing
Date as though originally made at that time (except for representations and warranties that speak as of a specific date, which shall be
true and correct as of such specific date) and the Company shall have performed, satisfied and complied in all respects with the covenants,
agreements and conditions required to be performed, satisfied or complied with by the Company at or prior to the Additional Closing Date.
Such Buyer shall have received a certificate, duly executed by the Chief Executive Officer of the Company, dated as of the Additional
Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form acceptable
to such Buyer.
(x) The
Company shall have delivered to such Buyer a letter from the Company’s New Transfer Agent certifying the number of shares of Common
Stock outstanding on the Additional Closing Date immediately prior to the Additional Closing.
42
(xi) The
Common Stock (A) shall be designated for quotation or listed (as applicable) on the Principal Market and (B) shall not have been suspended,
as of the Additional Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the
SEC or the Principal Market have been threatened, as of the Additional Closing Date, either (I) in writing by the SEC or the Principal
Market or (II) by falling below the minimum maintenance requirements of the Principal Market, including the minimum stockholders’
equity requirement pursuant to Nasdaq Listing Rule 5550(b)(1).
(xii) The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale of the
Securities, including without limitation, those required by the Principal Market, if any.
(xiii) No
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by
any court or Governmental Entity of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by
the Transaction Documents.
(xiv) Since
the date of execution of this Agreement, no event or series of events shall have occurred that reasonably would have or result in a Material
Adverse Effect.
(xv) The
Company shall have obtained approval of the Principal Market to list or designate for quotation (as the case may be) the Additional Conversion
Shares.
(xvi) Such
Buyer shall have received a letter on the letterhead of the Company, duly executed by the Chief Executive Officer or Chief Financial Officer
of the Company, setting forth the wire amounts of each Buyer and the wire transfer instructions of the Company (the “Additional
Flow of Funds Letter”, and together with the Second Flow of Funds Letter and Additional Flow of Funds Letter, each, a “Flow
of Funds Letter”).
(xvii) The
Company and its Subsidiaries shall have delivered to such Buyer such other documents, instruments or certificates relating to the transactions
contemplated by this Agreement as such Buyer or its counsel may reasonably request.
8. TERMINATION.
In the event that the Initial Closing
shall not have occurred with respect to any Buyer within five (5) days of the date hereof, then such Buyer shall have the right to terminate
its obligations under this Agreement with respect to itself at any time on or after the close of business on such date without liability
of such Buyer to any other party; provided, however, (i) the right to terminate this Agreement under this Section 8 shall not be
available to such Buyer if the failure of the transactions contemplated by this Agreement to have been consummated by such date is the
result of such Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the Notes shall be applicable
only to such Buyer providing such written notice, provided further that no such termination shall affect any obligation of the Company
under this Agreement to reimburse such Buyer for the expenses described in Section 4(g) above. Nothing contained in this Section 8
shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or
the other Transaction Documents or to impair the right of any party to compel specific performance by any other party of its obligations
under this Agreement or the other Transaction Documents.
9. MISCELLANEOUS.
(a) Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Agreement
shall be governed by the internal laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of Nevada or any other jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Nevada. The Company hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting
in Las Vegas, Nevada, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents
or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit,
43
action or
proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service
of process and notice thereof. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS
AGREEMENT, ANY OTHER TRANSACTION DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(b) Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and delivered to the other party. In the event that any signature
is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature
page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such signature page were an original thereof.
(c) Headings;
Gender. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of,
this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine,
neuter, singular and plural forms thereof. The terms “including,” “includes,” “include” and words
of like import shall be construed broadly as if followed by the words “without limitation.” The terms “herein,”
“hereunder,” “hereof” and words of like import refer to this entire Agreement instead of just the provision in
which they are found.
(d) Severability;
Maximum Payment Amounts. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable
by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended
to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall
not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability
of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as
close as possible to that of the prohibited, invalid or unenforceable provision(s). Notwithstanding anything to the contrary contained
in this Agreement or any other Transaction Document (and without implication that the following is required or applicable), it is the
intention of the parties that in no event shall amounts and value paid by the Company and/or any of its Subsidiaries (as the case may
be), or payable to or received by any of the Buyers, under the Transaction Documents (including without limitation, any amounts that would
be characterized as “interest” under applicable law) exceed amounts permitted under any applicable law. Accordingly, if any
obligation to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is finally judicially determined
to be contrary to any such applicable law, such obligation to pay, payment or collection shall be deemed to have been made by mutual mistake
of such Buyer, the Company and its Subsidiaries and such amount shall be deemed to have been adjusted with retroactive effect to the maximum
amount or rate of interest, as the case may be, as would not be so prohibited by the applicable law. Such adjustment shall be effected,
to the extent necessary, by reducing or refunding, at the option of such Buyer, the amount of interest or any other amounts which would
constitute unlawful amounts required to be paid or actually paid to such Buyer under the Transaction Documents. For greater certainty,
to the extent that any interest, charges, fees, expenses or other amounts required to be paid to or received by such Buyer under any of
the Transaction Documents or related thereto are held to be within the meaning of “interest” or another applicable term to
otherwise be violative of applicable law, such amounts shall be pro-rated over the period of time to which they relate.
44
(e) Entire
Agreement; Amendments. This Agreement, the other Transaction Documents and the schedules and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral or written agreements between the Buyers, the Company,
its Subsidiaries, their affiliates and Persons acting on their behalf, including, without limitation, any transactions by any Buyer with
respect to Common Stock or the Securities, and the other matters contained herein and therein, and this Agreement, the other Transaction
Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein and therein contain the entire
understanding of the parties solely with respect to the matters covered herein and therein; provided, however, nothing contained in this
Agreement or any other Transaction Document shall (or shall be deemed to) (i) have any effect on any agreements any Buyer has entered
into with, or any instruments any Buyer has received from, the Company or any of its Subsidiaries prior to the date hereof with respect
to any prior investment made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any obligations of the
Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or any other Person, in any agreement entered into prior
to the date hereof between or among the Company and/or any of its Subsidiaries and any Buyer, or any instruments any Buyer received from
the Company and/or any of its Subsidiaries prior to the date hereof, and all such agreements and instruments shall continue in full force
and effect. Except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. For clarification purposes, the Recitals are part of this Agreement. No provision
of this Agreement may be amended other than by an instrument in writing signed by the Company and the Required Holders (as defined below),
and any amendment to any provision of this Agreement made in conformity with the provisions of this Section 9(e) shall be binding
on all Buyers and holders of Securities, as applicable; provided that no such amendment shall be effective to the extent that it (A) applies
to less than all of the holders of the Securities then outstanding or (B) imposes any obligation or liability on any Buyer without such
Buyer’s prior written consent (which may be granted or withheld in such Buyer’s sole discretion); and provided further that
the provisions of Sections 4(v) and 4(w) above cannot be amended or waived without the additional prior written approval of the Collateral
Agent or its successor. Notwithstanding anything in any Transaction Document to the contrary, no waiver shall be effective unless it is
in writing and signed by an authorized representative of the waiving party, provided that the Required Holders may waive any provision
of this Agreement or any other Transaction Document, and any waiver of any provision of this Agreement or any other Transaction Document
made in conformity with the provisions of this Section 9(e) shall be binding on all Buyers and holders of Securities, as applicable,
provided that no such waiver shall be effective to the extent that it (1) applies to less than all of the holders of the Securities then
outstanding (unless a party gives a waiver as to itself only) or (2) imposes any obligation or liability on any Buyer without such Buyer’s
prior written consent (which may be granted or withheld in such Buyer’s sole discretion). No consideration (other than reimbursement
of legal fees) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of any of the Transaction
Documents unless the same consideration also is offered to all of the parties to the Transaction Documents, all holders of the Notes.
From the date hereof and while any Notes are outstanding, the Company shall not be permitted to receive any consideration from a Buyer
or a holder of Notes that is not otherwise contemplated by the Transaction Documents in order to, directly or indirectly, induce the Company
or any Subsidiary (i) to treat such Buyer or holder of Notes in a manner that is more favorable than to other similarly situated Buyers
or holders of Notes, or (ii) to treat any Buyer(s) or holder(s) of Notes, in a manner that is less favorable than the Buyer or holder
of Notes, that is paying such consideration; provided, however, that the determination of whether a Buyer has been treated more or less
favorably than another Buyer shall disregard any securities of the Company purchased or sold by any Buyer. The Company has not, directly
or indirectly, made any agreements with any Buyers relating to the terms or conditions of the transactions contemplated by the Transaction
Documents except as set forth in the Transaction Documents. Without limiting the foregoing, the Company confirms that, except as set forth
in this Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any financing to the Company, any
Subsidiary or otherwise. As a material inducement for each Buyer to enter into this Agreement, the Company expressly acknowledges and
agrees that (x) no due diligence or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its representatives
shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception to any of, the Company’s
representations and warranties contained in this Agreement or any other Transaction Document and (y) unless a provision of this Agreement
or any other Transaction Document is expressly preceded by the phrase “except as disclosed in the SEC Documents,” nothing
contained in any of the SEC Documents shall affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be
an exception to any of, the Company’s representations and warranties contained in this Agreement or any other Transaction Document.
“Required Holders” means (I) on any given date when the Lead Buyer holds any Notes, just the Lead Buyer and (II) on
any given date when the Lead Buyer does not hold any Notes, holders of a majority of the Registrable Securities as of such time (excluding
any Registrable Securities held by the Company or any of its Subsidiaries as of such time) issued or issuable hereunder or pursuant to
the Notes (or the Buyers, with respect to any waiver or amendment of Section 4(o)); provided, that such majority must include the Lead
Buyer.
45
(f) Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic
mail (provided that such sent e-mail is kept on file (whether electronically or otherwise) by the sending party and the sending party
does not receive an automatically generated message from the recipient’s e-mail server that such e-mail could not be delivered to
such recipient); or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each
case, properly addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Sadot Group Inc.,
295 E. Renfro St., Suite 300
Burleson, Texas 76028
Telephone: (832) 604-9568
Attention: Haggai Ravid, Chief Executive Officer
E-Mail: haggai.ravid@sadotco.com
With a copy (for informational purposes only) to:
Fleming PLLC
30 Wall Street, 8th Floor
New York, New York 10005
Telephone: (516) 902-6567
Attention: Stephen M. Fleming, Esq.
E-Mail: smf@flemingpllc.com
If to the Transfer Agent:
Computershare, Inc.
6200 S. Quebec St.
Greenwood Village, Colorado 80111
Telephone: (303) 262-0702
E-Mail: Jennifer.Lippoldt@computershare.com
If to a Buyer, to its mailing address and e-mail address
set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on the Schedule of Buyers,
with a copy (for informational purposes only) to:
Sullivan & Worcester LLP
1251 Avenue of the Americas
New York, New York 10020
Telephone: (212) 660-3060
Attention: David E. Danovitch, Esq.
E-mail: ddanovitch@sullivanlaw.com
or to such other mailing address and/or e-mail address
and/or to the attention of such other Person as the recipient party has specified by written notice given to each other party five (5)
days prior to the effectiveness of such change, provided that Sullivan & Worcester LLP shall only be provided copies of notices sent
to the Lead Buyer. Written confirmation of receipt (A) given by the recipient of such notice, consent, waiver or other communication,
(B) mechanically or electronically generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C)
provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above, respectively.
46
(g) Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of any of the Notes. The Company shall not assign this Agreement or any rights or obligations hereunder without
the prior written consent of the Required Holders, including, without limitation, by way of a Fundamental Transaction (as defined in the
Notes) (unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes).
A Buyer may assign some or all of its rights hereunder in connection with any transfer of any of its Securities without the consent of
the Company, in which event such assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.
(h) No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors
and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees
referred to in Section 9(k).
(i) Survival.
The representations, warranties, agreements and covenants shall survive each Closing. Each Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) Indemnification.
In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder and
in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect, indemnify
and hold harmless each Buyer and each holder of any Securities and all of their shareholders, partners, members, officers, directors,
employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Indemnitees”)
from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses
in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought),
and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee
as a result of, or arising out of, or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company
or any Subsidiary in any of the Transaction Documents, (ii) any breach of any covenant, agreement or obligation of the Company or any
Subsidiary contained in any of the Transaction Documents or (iii) any cause of action, suit, proceeding or claim brought or made against
such Indemnitee by a third party (including for these purposes a derivative action brought on behalf of the Company or any Subsidiary)
or which otherwise involves such Indemnitee that arises out of or results from (A) the execution, delivery, performance or enforcement
of any of the Transaction Documents, (B) any transaction financed or to be financed in whole or in part, directly or indirectly, with
the proceeds of the issuance of the Securities, (C) any disclosure properly made by such Buyer pursuant to Section 4(i), or (D) the
status of such Buyer or holder of the Securities either as an investor in the Company pursuant to the transactions contemplated by the
Transaction Documents or as a party to this Agreement (including, without limitation, as a party in interest or otherwise in any action
or proceeding for injunctive or other equitable relief). To the extent that the foregoing undertaking by the Company may be unenforceable
for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities
which is permissible under applicable law. Except as otherwise set forth herein, the mechanics and procedures with respect to the rights
and obligations under this Section 9(k) shall be the same as those set forth in Section 6 of the Registration Rights Agreement.
(l) Construction.
The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules
of strict construction will be applied against any party. No specific representation or warranty shall limit the generality or applicability
of a more general representation or warranty. Each and every reference to share prices, Common Stock and any other numbers in this Agreement
that relate to the Common Stock shall be automatically adjusted for any stock splits, stock dividends, stock combinations, recapitalizations
or other similar transactions that occur with respect to the shares of Common Stock after the date of this Agreement. Notwithstanding
anything in this Agreement to the contrary, for the avoidance of doubt, nothing contained herein shall constitute a representation or
warranty against, or a prohibition of, any actions with respect to the borrowing of, arrangement to borrow, identification of the availability
of, and/or securing of, securities of the Company in order for such Buyer (or its broker or other financial representative) to effect
short sales or similar transactions in the future.
47
(m) Remedies.
Each Buyer and in the event of assignment by Buyer of its rights and obligations hereunder, each holder of Securities, shall have all
rights and remedies set forth in the Transaction Documents and all rights and remedies which such holders have been granted at any time
under any other agreement or contract and all of the rights which such holders have under any law. Any Person having any rights under
any provision of this Agreement shall be entitled to enforce such rights specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company
recognizes that in the event that it or any Subsidiary fails to perform, observe, or discharge any or all of its or such Subsidiary’s
(as the case may be) obligations under the Transaction Documents, any remedy at law would inadequate relief to the Buyers. The Company
therefore agrees that the Buyers shall be entitled to specific performance and/or temporary, preliminary and permanent injunctive or other
equitable relief from any court of competent jurisdiction in any such case without the necessity of proving actual damages and without
posting a bond or other security. The remedies provided in this Agreement and the other Transaction Documents shall be cumulative and
in addition to all other remedies available under this Agreement and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief).
(n) Withdrawal
Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents,
whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the Company or any Subsidiary does not
timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw, in its sole discretion
from time to time upon written notice to the Company or such Subsidiary (as the case may be), any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights.
(o) Payment
Set Aside; Currency. To the extent that the Company makes a payment or payments to any Buyer hereunder or pursuant to any of the other
Transaction Documents or any of the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver
or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall
be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and the other Transaction Documents are in United
States Dollars (“U.S. Dollars”), and all amounts owing under this Agreement and all other Transaction Documents shall
be paid in U.S. Dollars. All amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent amount
in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of
currency to be converted into U.S. Dollars pursuant to this Agreement, the U.S. Dollar exchange rate as published in the Wall Street Journal
on the relevant date of calculation.
(p) Judgment
Currency.
(i) If
for the purpose of obtaining or enforcing judgment against the Company in connection with this Agreement or any other Transaction Document
in any court in any jurisdiction it becomes necessary to convert into any other currency (such other currency being hereinafter in this
Section 9(p) referred to as the “Judgment Currency”) an amount due in US Dollars under this Agreement, the conversion
shall be made at the Exchange Rate prevailing on the Trading Day immediately preceding:
(1) the
date actual payment of the amount due, in the case of any proceeding in the courts of Nevada or in the courts of any other jurisdiction
that will give effect to such conversion being made on such date: or
(2) the
date on which the foreign court determines, in the case of any proceeding in the courts of any other jurisdiction (the date as of which
such conversion is made pursuant to this Section 9(p)(i)(2) being hereinafter referred to as the “Judgment Conversion Date”).
48
(ii) If
in the case of any proceeding in the court of any jurisdiction referred to in Section 9(p)(i)(2) above, there is a change in the
Exchange Rate prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the applicable party shall
pay such adjusted amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted at the Exchange Rate
prevailing on the date of payment, will produce the amount of US Dollars which could have been purchased with the amount of Judgment Currency
stipulated in the judgment or judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.
(iii) Any
amount due from the Company under this provision shall be due as a separate debt and shall not be affected by judgment being obtained
for any other amounts due under or in respect of this Agreement or any other Transaction Document.
(q) Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under the Transaction Documents are several and not
joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of
any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by
any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that the Buyers do not
so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Buyers
are in any way acting in concert or as a group or entity, and the Company shall not assert any such claim with respect to such obligations
or the transactions contemplated by the Transaction Documents or any matters, and the Company acknowledges that the Buyers are not acting
in concert or as a group, and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated
by the Transaction Documents. The decision of each Buyer to purchase Securities pursuant to the Transaction Documents has been made by
such Buyer independently of any other Buyer. Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection
with such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such Buyer in connection with monitoring
such Buyer’s investment in the Securities or enforcing its rights under the Transaction Documents. The Company and each Buyer confirms
that each Buyer has independently participated with the Company and its Subsidiaries in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and enforce its rights,
including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be
necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a single agreement to
effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of the Company, not the action or decision
of any Buyer, and was done solely for the convenience of the Company and its Subsidiaries and not because it was required or requested
to do so by any Buyer. It is expressly understood and agreed that each provision contained in this Agreement and in each other Transaction
Document is between the Company, each Subsidiary and a Buyer, solely, and not between the Company, its Subsidiaries and the Buyers collectively
and not between and among the Buyers.
[signature pages follow]
49
IN WITNESS WHEREOF, each
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
COMPANY:
SADOT GROUP INC.
By:
Name: Haggai Ravid
Title: Chief Executive Officer
IN WITNESS WHEREOF, each
Buyer and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.
BUYER:
[ ]
By:
Name:
Title:
SCHEDULE OF BUYERS
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
Buyer
Address and Facsimile
Number
Original Principal
Amount of Initial Notes
Original Principal
Amount of Second Notes
Maximum
Original Principal Amount of
Additional Notes at an Additional Closing
Maximum
Original Principal Amount of
Additional Notes at all Additional Closings
Initial
Purchase Price of Notes
Second Purchase
Price of Notes
Legal Representative’s
Address and Facsimile Number
[•] (the “Lead Buyer”)
[•]
Attention: [•]
E-Mail: [•]
$4,000,000.00
$1,000,000
$2,000,000
$95,000,000.00
$3,600,000.00
$900,000
Sullivan & Worcester LLP
1251 Avenue of the Americas
New York, New York 10020
Telephone: (212) 660-3060
Attention: David E. Danovitch, Esq.
E-mail: ddanovitch@sullivanlaw.com
TOTAL
$4,000,000.00
$1,000,000
$2,000,000
$95,000,000.00
$3,600,000.00
$900,000
EXHIBIT A
FORM OF SENIOR SECURED CONVERTIBLE NOTE
EXHIBIT B
FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT C
FORM OF SECURITY AGREEMENT
EXHIBIT D
FORM OF GUARANTY
EX-10.3 — EXHIBIT 10.3
EX-10.3
Filename: e7788_ex10-3.htm · Sequence: 7
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of July 16, 2026, is by and among Sadot Group Inc., a Nevada corporation with offices
located at 295 E. Renfro Street, Suite 300, Burleson, Texas 76028 (the “Company”), and the undersigned buyers (each,
a “Buyer,” and collectively, the “Buyers”).
RECITALS
A. In
connection with the Securities Purchase Agreement by and among the parties hereto, dated as of July 16, 2026 (the “Securities
Purchase Agreement”), the Company has agreed, upon the terms and subject to the conditions of the Securities Purchase Agreement,
to issue and sell to each Buyer the Notes (as defined in the Securities Purchase Agreement) which will be convertible into Conversion
Shares (as defined in the Securities Purchase Agreement) in accordance with the terms of the Notes.
B. To
induce the Buyers to consummate the transactions contemplated by the Securities Purchase Agreement, the Company has agreed to provide
certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the “1933 Act”), and applicable state securities laws.
AGREEMENT
NOW, THEREFORE, in consideration
of the premises and the mutual covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Company and each of the Buyers hereby agree as follows:
1. Definitions.
Capitalized terms used herein and
not otherwise defined herein shall have the respective meanings set forth in the Securities Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:
(a) “Business
Day” means any day other than a Saturday, Sunday or other day on which commercial banks in The City of New York are authorized
or required by law to remain closed; provided, however, for clarification, commercial
banks shall not be deemed to be authorized or required by law to remain closed due to “stay at home”, “shelter-in-place”,
“non-essential employee” or any other similar orders or restrictions or the closure of any physical branch locations at the
direction of any governmental authority so long as the electronic funds transfer systems (including for wire transfers) of commercial
banks in The City of New York generally are open for use by customers on such day.
(b) “Common
Stock” means (x) the Company’s common stock, $0.0001 par value per share, and (y) any shares into which such shares of
Common Stock shall have been changed or any share of capital stock resulting from a reclassification of such shares of Common Stock.
(c) “Effective
Date” means the date that the applicable Registration Statement has been declared effective by the SEC.
(d) “Effectiveness
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the
earlier of the (A) 45th calendar day after the Initial Closing Date and (B) 2nd Business Day after the date the Company is
notified (orally or in writing, whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be
subject to further review and (ii) with respect to any additional Registration Statements that may be required to be filed by the Company
pursuant to this Agreement, the earlier of the (A) 45th calendar day following the date on which the Company was required to
file such additional Registration Statement and (B) 2nd Business Day after the date the Company is notified (orally or in writing,
whichever is earlier) by the SEC that such Registration Statement will not be reviewed or will not be subject to further review.
(e) “Filing
Deadline” means (i) with respect to the initial Registration Statement required to be filed pursuant to Section 2(a), the
10th calendar day after the Initial Closing Date and (ii) with respect to any additional Registration Statements that
may be required to be filed by the Company pursuant to this Agreement, the date on which the Company was required to file such additional
Registration Statement pursuant to the terms of this Agreement.
(f) “Initial
Closing Date” shall have the meaning set forth in the Securities Purchase Agreement.
(g) “Investor”
means a Buyer or any transferee or assignee of any Registrable Securities or Notes, as applicable, to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9 and any transferee
or assignee thereof to whom a transferee or assignee of any Registrable Securities or Notes, as applicable, assigns its rights under this
Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 9.
(h) “Person”
means an individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an unincorporated organization
or a government or any department or agency thereof.
(i) “register,”
“registered,” and “registration” refer to a registration effected by preparing and filing one or
more Registration Statements in compliance with the 1933 Act and pursuant to Rule 415 and the declaration of effectiveness of such Registration
Statement(s) by the SEC.
(j) “Registrable
Securities” means all of (i) the Conversion Shares and (ii) any shares of capital stock of the Company issued or issuable with
respect to the Conversion Shares or the Notes, including, without limitation, (1) as a result of any stock split, stock dividend, recapitalization,
exchange or similar event or otherwise and (2) any shares of capital stock of the Company into which the shares of Common Stock are converted
or exchanged and shares of capital stock of a Successor Entity (as defined in the Notes) into which the shares of Common Stock are converted
or exchanged, in each case, without regard to any limitations on conversion of the Notes.
(k) “Registration
Statement” means any registration statement of the Company filed under the 1933 Act covering the Registrable Securities pursuant
to this Agreement, including the prospectus that forms a part of the Registration Statement, amendments and supplements to such registration
statement or prospectus, including post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed
to be incorporated by reference in such registration statement.
(l) “Required
Holders” shall have the meaning as set forth in the Securities Purchase Agreement.
(m) “Required
Registration Amount” means, as of any time of determination, 150% of the maximum number of Conversion Shares issuable upon conversion
of the Notes (assuming for purposes hereof that (i) all Second Notes (as defined in the Securities Purchase Agreement) and Additional
Notes (as defined in the Securities Purchase Agreement) issuable pursuant to the Securities Purchase Agreement shall have been issued
at the Second Closing (as defined in the Securities Purchase Agreement) and an Additional Closing (as defined in the Securities Purhase
Agreement) on the Initial Closing Date, (ii) the Notes are convertible at the Floor Price (as defined in the Notes) as of such time of
determination, (iii) interest on the Notes shall accrue through the second anniversary of the Initial Closing Date and will be converted
into shares of Common Stock at the Floor Price as of such time of determination and (iv) any such conversion shall not take into account
any limitations on the conversion of the Notes set forth in the Notes), all subject to adjustment as provided in Section 2(d) and/or
Section 2(f).
(n) “Rule
144” means Rule 144 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar
or successor rule or regulation of the SEC that may at any time permit the Investors to sell securities of the Company to the public without
registration.
(o) “Rule
415” means Rule 415 promulgated by the SEC under the 1933 Act, as such rule may be amended from time to time, or any other similar
or successor rule or regulation of the SEC providing for offering securities on a continuous or delayed basis.
2
(p) “SEC”
means the United States Securities and Exchange Commission or any successor thereto.
2. Registration.
(a) Mandatory
Registration. The Company shall prepare and, as soon as practicable, but in no event later than the Filing Deadline, file with the
SEC an initial Registration Statement on Form S-3 covering the resale of all of the Registrable Securities, provided that such initial
Registration Statement shall register for resale at least the number of shares of Common Stock equal to the Required Registration Amount
as of the date such Registration Statement is initially filed with the SEC; provided further that if Form S-3 is unavailable for such
a registration, the Company shall use such other form as is required by Section 2(c). Such initial Registration Statement, and each other
Registration Statement required to be filed pursuant to the terms of this Agreement, shall contain (except if otherwise directed by the
Required Holders) the “Selling Stockholders” and “Plan of Distribution” sections in substantially
the form attached hereto as Exhibit B. The Company shall use its best efforts to have such initial Registration Statement, and
each other Registration Statement required to be filed pursuant to the terms of this Agreement, declared effective by the SEC as soon
as practicable, but in no event later than the applicable Effectiveness Deadline for such Registration Statement.
(b) Legal
Counsel. Subject to Section 5 hereof, Sullivan & Worcester LLP, counsel solely to the lead investor (“Legal Counsel”),
shall review and oversee any registration, solely on behalf of the lead investor, pursuant to this Section 2.
(c) Ineligibility
to Use Form S-3. In the event that Form S-3 is not available for the registration of the resale of Registrable Securities hereunder,
the Company shall (i) register the resale of the Registrable Securities on Form S-1 or another appropriate form reasonably acceptable
to the Required Holders and (ii) undertake to register the resale of the Registrable Securities (less the Registrable Securities previously
registered for resale pursuant to Registration Statements previously filed by the Company in accordance with this Agreement) on Form S-3
as soon as such form is available, provided that the Company shall maintain the effectiveness of all Registration Statements then in effect
until such time as a Registration Statement on Form S-3 covering the resale of all the Registrable Securities has been declared effective
by the SEC and the prospectus contained therein is available for use.
(d) Sufficient
Number of Shares Registered. In the event the number of shares available under any Registration Statement is insufficient to cover
all of the Registrable Securities required to be covered by such Registration Statement or an Investor’s allocated portion of the
Registrable Securities pursuant to Section 2(h), the Company shall amend such Registration Statement (if permissible), or file with
the SEC a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least the Required
Registration Amount as of the Trading Day (as defined in the Notes) immediately preceding the date of the filing of such amendment or
new Registration Statement, in each case, as soon as practicable, but in any event not later than fifteen (15) days after the necessity
therefor arises (but taking account of any Staff position with respect to the date on which the Staff will permit such amendment to the
Registration Statement and/or such new Registration Statement (as the case may be) to be filed with the SEC). The Company shall use its
best efforts to cause such amendment to such Registration Statement and/or such new Registration Statement (as the case may be) to become
effective as soon as practicable following the filing thereof with the SEC, but in no event later than the applicable Effectiveness Deadline
for such Registration Statement. For purposes of the foregoing provision, the number of shares available under a Registration Statement
shall be deemed “insufficient to cover all of the Registrable Securities” if at any time the number of shares of Common Stock
available for resale under the applicable Registration Statement is less than the product determined by multiplying (i) the Required Registration
Amount as of such time by (ii) 0.90. The calculation set forth in the foregoing sentence shall be made without regard to any limitations
on conversion, amortization and/or redemption of the Notes (and such calculation shall assume (A) that the Notes are then convertible
in full into shares of Common Stock at the then prevailing Conversion Rate (as defined in the Notes) and (B) the initial outstanding principal
amount of the Notes remains outstanding through the scheduled Maturity Date (as defined in the Notes) and no redemptions of the Notes
occur prior to the scheduled Maturity Date.
3
(e) Effect
of Failure to File and Obtain and Maintain Effectiveness of any Registration Statement. If (i) a Registration Statement covering the
resale of all of the Registrable Securities required to be covered thereby (disregarding any reduction pursuant to Section 2(f))
and required to be filed by the Company pursuant to this Agreement is (A) not filed with the SEC on or before the Filing Deadline for
such Registration Statement (a “Filing Failure”) (it being understood that if the Company files a Registration Statement
without affording each Investor and Legal Counsel the opportunity to review and comment on the same as required by Section 3(c) hereof,
the Company shall be deemed to not have satisfied this clause (i)(A) and such event shall be deemed to be a Filing Failure) or (B)
not declared effective by the SEC on or before the Effectiveness Deadline for such Registration Statement (an “Effectiveness
Failure”) (it being understood that if on the Business Day immediately following the Effective Date for such Registration Statement
the Company shall not have filed a “final” prospectus for such Registration Statement with the SEC under Rule 424(b) in accordance
with Section 3(b) (whether or not such a prospectus is technically required by such rule), the Company shall be deemed to not have
satisfied this clause (i)(B) and such event shall be deemed to be an Effectiveness Failure), (ii) other than during an Allowable Grace
Period (as defined below), on any day after the Effective Date of a Registration Statement sales of all of the Registrable Securities
required to be included on such Registration Statement (disregarding any reduction pursuant to Section 2(f)) cannot be made pursuant
to such Registration Statement (including, without limitation, because of a failure to keep such Registration Statement effective, a failure
to disclose such information as is necessary for sales to be made pursuant to such Registration Statement, a suspension or delisting of
(or a failure to timely list) the Common Stock on the Principal Market (as defined in the Securities Purchase Agreement) or any other
limitations imposed by the Principal Market, or a failure to register a sufficient number of shares of Common Stock or by reason of a
stop order) or the prospectus contained therein is not available for use for any reason (a “Maintenance Failure”),
or (iii) if a Registration Statement is not effective for any reason or the prospectus contained therein is not available for use for
any reason, and either (x) the Company fails for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation,
the failure to satisfy the current public information requirement under Rule 144(c) or (y) the Company has ever been an issuer described
in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set forth in Rule 144(i)(2)
(a “Current Public Information Failure”) as a result of which any of the Investors are unable to sell Registrable Securities
without restriction under Rule 144 (including, without limitation, volume restrictions), then, as partial relief for the damages
to any holder by reason of any such delay in, or reduction of, its ability to sell the underlying shares of Common Stock (which remedy
shall not be exclusive of any other remedies available at law or in equity, including, without limitation, specific performance), the
Company shall pay to each holder of Registrable Securities relating to such Registration Statement an amount in cash equal to two percent
(2%) of such Investor’s original principal amount stated in such Investor’s Note on the Initial Closing Date (1) on the date
of such Filing Failure, Effectiveness Failure, Maintenance Failure or Current Public Information Failure, as applicable, and (2) on every
thirty (30) day anniversary of (I) a Filing Failure until such Filing Failure is cured; (II) an Effectiveness Failure until such Effectiveness
Failure is cured; (III) a Maintenance Failure until such Maintenance Failure is cured; and (IV) a Current Public Information Failure
until the earlier of (i) the date such Current Public Information Failure is cured and (ii) such time that such public information is
no longer required pursuant to Rule 144 (in each case, pro rated for periods totaling less than thirty (30) days). The payments to
which a holder of Registrable Securities shall be entitled pursuant to this Section 2(e) are referred to herein as “Registration
Delay Payments.” Following the initial Registration Delay Payment for any particular event or failure (which shall be paid on
the date of such event or failure, as set forth above), without limiting the foregoing, if an event or failure giving rise to the Registration
Delay Payments is cured prior to any thirty (30) day anniversary of such event or failure, then such Registration Delay Payment shall
be made on the third (3rd) Business Day after such cure. In the event the Company fails to make Registration Delay Payments
in a timely manner in accordance with the foregoing, such Registration Delay Payments shall bear interest at the rate of three percent
(3%) per month (prorated for partial months) until paid in full. Notwithstanding the foregoing, no Registration Delay Payments shall be
owed to an Investor (other than with respect to a Maintenance Failure resulting from a suspension or delisting of (or a failure to timely
list) the shares of Common Stock on the Principal Market) with respect to any period during which all of such Investor’s Registrable
Securities may be sold by such Investor without restriction under Rule 144 (including, without limitation, volume restrictions) and without
the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable).
4
(f) Offering.
Notwithstanding anything to the contrary contained in this Agreement, but subject to the payment of the Registration Delay Payments pursuant
to Section 2(e), in the event the staff of the SEC (the “Staff”) or the SEC seeks to characterize any offering
pursuant to a Registration Statement filed pursuant to this Agreement as constituting an offering of securities by, or on behalf
of, the Company, or in any other manner, such that the Staff or the SEC do not permit such Registration Statement to become
effective and used for resales in a manner that does not constitute such an offering and that permits the continuous resale at the market
by the Investors participating therein (or as otherwise may be acceptable to each Investor) without being named therein as an
“underwriter,” then the Company shall reduce the number of shares to be included in such Registration Statement by all Investors
until such time as the Staff and the SEC shall so permit such Registration Statement to become effective as aforesaid. In making
such reduction, the Company shall reduce the number of shares to be included by all Investors on a pro rata basis (based upon the number
of Registrable Securities otherwise required to be included for each Investor) unless the inclusion of shares by a particular Investor
or a particular set of Investors are resulting in the Staff or the SEC’s “by or on behalf of the Company” offering position,
in which event the shares held by such Investor or set of Investors shall be the only shares subject to reduction (and if by a set of
Investors on a pro rata basis by such Investors or on such other basis as would result in the exclusion of the least number of shares
by all such Investors); provided, that, with respect to such pro rata portion allocated to any Investor, such Investor may elect the allocation
of such pro rata portion among the Registrable Securities of such Investor. In addition, in the event that the Staff or the SEC requires
any Investor seeking to sell securities under a Registration Statement filed pursuant to this Agreement to be specifically identified
as an “underwriter” in order to permit such Registration Statement to become effective, and such Investor does not consent
to being so named as an underwriter in such Registration Statement, then, in each such case, the Company shall reduce the total
number of Registrable Securities to be registered on behalf of such Investor, until such time as the Staff or the SEC does
not require such identification or until such Investor accepts such identification and the manner thereof. Any reduction pursuant to this
paragraph will first reduce all Registrable Securities other than those issued pursuant to the Securities Purchase Agreement. In
the event of any reduction in Registrable Securities pursuant to this paragraph, an affected Investor shall have the right to
require, upon delivery of a written request to the Company signed by such Investor, the Company to file a registration statement within
twenty (20) days of such request (subject to any restrictions imposed by Rule 415 or required by the Staff or the SEC) for resale
by such Investor in a manner acceptable to such Investor, and the Company shall following such request cause to be and keep effective
such registration statement in the same manner as otherwise contemplated in this Agreement for registration statements hereunder,
in each case until such time as: (i) all Registrable Securities held by such Investor have been registered and sold pursuant to an
effective Registration Statement in a manner acceptable to such Investor or (ii) all Registrable Securities may be resold by such
Investor without restriction (including, without limitation, volume limitations) pursuant to Rule 144 (taking account of any Staff
position with respect to “affiliate” status) and without the need for current public information required by Rule 144(c)(1)
(or Rule 144(i)(2), if applicable) or (iii) such Investor agrees to be named as an underwriter in any such Registration Statement in a
manner acceptable to such Investor as to all Registrable Securities held by such Investor and that have not theretofore been included
in a Registration Statement under this Agreement (it being understood that the special demand right under this sentence may be exercised
by an Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such
Investor as contemplated above).
(g) Piggyback
Registrations. Without limiting any obligation of the Company hereunder or under the Securities Purchase Agreement, if there is not
an effective Registration Statement covering all of the Registrable Securities or the prospectus contained therein is not available for
use and the Company shall determine to prepare and file with the SEC a registration statement or offering statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its equity securities (other than on Form S-4 or Form S-8 (each
as promulgated under the 1933 Act) or their then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee
benefit plans), then the Company shall deliver to each Investor a written notice of such determination and, if within fifteen (15)
days after the date of the delivery of such notice, any such Investor shall so request in writing, the Company shall include in such registration
statement or offering statement all or any part of such Registrable Securities such Investor requests to be registered; provided, however,
the Company shall not be required to register any Registrable Securities pursuant to this Section 2(g) that are eligible for resale
pursuant to Rule 144 without restriction (including, without limitation, volume restrictions) and without the need for current public
information required by Rule 144(c)(1) (or Rule 144(i)(2), if applicable) or that are the subject of a then-effective Registration
Statement.
5
(h) Allocation
of Registrable Securities. The initial number of Registrable Securities included in any Registration Statement and any increase in
the number of Registrable Securities included therein shall be allocated pro rata among the Investors based on the number of Registrable
Securities held by each Investor at the time such Registration Statement covering such initial number of Registrable Securities or increase
thereof is declared effective by the SEC. In the event that an Investor sells or otherwise transfers any of such Investor’s Registrable
Securities, each transferee or assignee (as the case may be) that becomes an Investor shall be allocated a pro rata portion of the then-remaining
number of Registrable Securities included in such Registration Statement for such transferor or assignee (as the case may be). Any shares
of Common Stock included in a Registration Statement and which remain allocated to any Person which ceases to hold any Registrable Securities
covered by such Registration Statement shall be allocated to the remaining Investors, pro rata based on the number of Registrable Securities
then held by such Investors which are covered by such Registration Statement.
(i) No
Inclusion of Other Securities. Except for (i) the securities described on Schedule A attached hereto (subject to reduction in full
before any reduction of Registrable Securities to be included on any Registration Statement, if applicable), and (ii) shares of Common
Stock issuable pursuant to that certain Equity Purchase Facility Agreement entered into between the Company and the investor signatory
thereto, the Company shall in no event include any securities other than Registrable Securities on any Registration Statement filed in
accordance herewith without the prior written consent of the Required Holders, except where the Investor requests to exercise the piggyback
registration rights pursuant to Section 2(g). Until the Applicable Date (as defined in the Securities Purchase Agreement), the Company
shall not enter into any agreement providing any registration rights to any of its security holders, except as otherwise permitted under
the Securities Purchase Agreement.
3. Related
Obligations.
The Company shall use its best
efforts to effect the registration of the Registrable Securities in accordance with the intended method of disposition thereof, and, pursuant
thereto, the Company shall have the following obligations:
(a) The
Company shall promptly prepare and file with the SEC a Registration Statement with respect to all the Registrable Securities (but in no
event later than the applicable Filing Deadline) and use its best efforts to cause such Registration Statement to become effective as
soon as practicable after such filing (but in no event later than the Effectiveness Deadline). Subject to Allowable Grace Periods, the
Company shall keep each Registration Statement effective (and the prospectus contained therein available for use) pursuant to Rule 415
for resales by the Investors on a delayed or continuous basis at then-prevailing market prices (and not fixed prices) at all times until
the earlier of (i) the date as of which all of the Investors may sell all of the Registrable Securities required to be covered by such
Registration Statement (disregarding any reduction pursuant to Section 2(f)) without restriction pursuant to Rule 144 (including,
without limitation, volume restrictions) and without the need for current public information required by Rule 144(c)(1) (or Rule 144(i)(2),
if applicable) or (ii) the date on which the Investors shall have sold all of the Registrable Securities covered by such Registration
Statement (the “Registration Period”). Notwithstanding anything to the contrary contained in this Agreement, the Company
shall ensure that, when filed and at all times while effective, each Registration Statement (including, without limitation, all amendments
and supplements thereto) and the prospectus (including, without limitation, all amendments and supplements thereto) used in connection
with such Registration Statement (1) shall not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein, or necessary to make the statements therein (in the case of prospectuses, in the light of the circumstances in which
they were made) not misleading and (2) will disclose (whether directly or through incorporation by reference to other SEC filings to the
extent permitted) all material information regarding the Company and its securities. The Company shall submit to the SEC, within one (1)
Business Day after the later of the date that (i) the Company learns that no review of a particular Registration Statement will be made
by the Staff or that the Staff has no further comments on a particular Registration Statement (as the case may be) and (ii) the consent
of Legal Counsel is obtained pursuant to Section 3(c) (which consent shall be immediately sought), a request for acceleration of
effectiveness of such Registration Statement to a time and date not later than twenty-four (24) hours after the submission of such
request. The Company shall respond in writing to comments made by the SEC in respect of a Registration Statement as soon as practicable,
but in no event later than fifteen (15) days after the receipt of comments by or notice from the SEC that an amendment is required in
order for a Registration Statement to be declared effective.
6
(b) Subject
to Section 3(r) of this Agreement, the Company shall prepare and file with the SEC such amendments (including, without limitation,
post-effective amendments) and supplements to each Registration Statement and the prospectus used in connection with each such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary to keep each such
Registration Statement effective at all times during the Registration Period for such Registration Statement, and, during such period,
comply with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities of the Company required to be
covered by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement; provided, however,
by 8:30 a.m. (New York time) on the Business Day immediately following each Effective Date, the Company shall file with the SEC in accordance
with Rule 424(b) under the 1933 Act the final prospectus to be used in connection with sales pursuant to the applicable Registration Statement
(whether or not such a prospectus is technically required by such rule). In the case of amendments and supplements to any Registration
Statement which are required to be filed pursuant to this Agreement (including, without limitation, pursuant to this Section 3(b))
by reason of the Company filing a Current Report on Form 8-K, Quarterly Report on Form 10-Q, Annual Report on Form 10-K or any analogous
report under the Securities Exchange Act of 1934, as amended (the “1934 Act”), the Company shall, if permitted under
the applicable rules and regulations of the SEC, have incorporated such report by reference into such Registration Statement, if applicable,
or shall file such amendments or supplements with the SEC on the same day on which the 1934 Act report is filed which created the requirement
for the Company to amend or supplement such Registration Statement.
(c) The
Company shall (A) permit Legal Counsel and legal counsel for each other Investor to review and comment upon (i) each Registration Statement
at least five (5) Business Days prior to its filing with the SEC and (ii) all amendments and supplements to each Registration Statement
(including, without limitation, the prospectus contained therein) (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and any similar or successor reports) within a reasonable number of days prior to their filing with the SEC,
and (B) not file any Registration Statement or amendment or supplement thereto in a form to which Legal Counsel or any legal counsel for
any other Investor reasonably objects. The Company shall not submit a request for acceleration of the effectiveness of a Registration
Statement or any amendment or supplement thereto or to any prospectus contained therein without the prior consent of Legal Counsel, which
consent shall not be unreasonably withheld. The Company shall promptly furnish to Legal Counsel and legal counsel for each other Investor,
without charge, (i) copies of any correspondence from the SEC or the Staff to the Company or its representatives relating to each Registration
Statement, provided that such correspondence shall not contain any material, non-public information regarding the Company or any of its
Subsidiaries (as defined in the Securities Purchase Agreement), (ii) after the same is prepared and filed with the SEC, one (1) copy
of each Registration Statement and any amendment(s) and supplement(s) thereto, including, without limitation, financial statements and
schedules, all documents incorporated therein by reference, if requested by an Investor, and all exhibits and (iii) upon the effectiveness
of each Registration Statement, one (1) copy of the prospectus included in such Registration Statement and all amendments and supplements
thereto. The Company shall reasonably cooperate with Legal Counsel and legal counsel for each other Investor in performing the Company’s
obligations pursuant to this Section 3.
(d) The
Company shall promptly furnish to each Investor whose Registrable Securities are included in any Registration Statement, without charge,
(i) after the same is prepared and filed with the SEC, at least one (1) copy of each Registration Statement and any amendment(s) and supplement(s)
thereto, including, without limitation, financial statements and schedules, all documents incorporated therein by reference, if requested
by an Investor, all exhibits and each preliminary prospectus, (ii) upon the effectiveness of each Registration Statement, ten (10)
copies of the prospectus included in such Registration Statement and all amendments and supplements thereto (or such other number of copies
as such Investor may reasonably request from time to time) and (iii) such other documents, including, without limitation, copies of any
preliminary or final prospectus, as such Investor may reasonably request from time to time in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
7
(e) The
Company shall use its best efforts to (i) register and qualify, unless an exemption from registration and qualification applies, the resale
by Investors of the Registrable Securities covered by a Registration Statement under such other securities or “blue sky” laws
of all applicable jurisdictions in the United States, (ii) prepare and file in those jurisdictions, such amendments (including, without
limitation, post-effective amendments) and supplements to such registrations and qualifications as may be necessary to maintain the effectiveness
thereof during the Registration Period, (iii) take such other actions as may be necessary to maintain such registrations and qualifications
in effect at all times during the Registration Period, and (iv) take all other actions reasonably necessary or advisable to qualify the
Registrable Securities for sale in such jurisdictions; provided, however, the Company shall not be required in connection therewith or
as a condition thereto to (x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this
Section 3(e), (y) subject itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify Legal Counsel, legal counsel for each other Investor and each Investor who
holds Registrable Securities of the receipt by the Company of any notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose.
(f) The
Company shall notify Legal Counsel, legal counsel for each other Investor and each Investor in writing of the happening of any event,
as promptly as practicable after becoming aware of such event, as a result of which the prospectus included in a Registration Statement,
as then in effect, may include an untrue statement of a material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided that
in no event shall such notice contain any material, non-public information regarding the Company or any of its Subsidiaries), and, subject
to Section 3(r), promptly prepare a supplement or amendment to such Registration Statement and such prospectus contained therein
to correct such untrue statement or omission and deliver ten (10) copies of such supplement or amendment to Legal Counsel, legal counsel
for each other Investor and each Investor (or such other number of copies as Legal Counsel, legal counsel for each other Investor or such
Investor may reasonably request). The Company shall also promptly notify Legal Counsel, legal counsel for each other Investor and each
Investor in writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been filed, when a Registration
Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to Legal Counsel,
legal counsel for each other Investor and each Investor by e-mail on the same day of such effectiveness and by overnight mail), and when
the Company receives written notice from the SEC that a Registration Statement or any post-effective amendment will be reviewed by the
SEC, (ii) of any request by the SEC for amendments or supplements to a Registration Statement or related prospectus or related information,
(iii) of the Company’s reasonable determination that a post-effective amendment to a Registration Statement would be appropriate;
and (iv) of the receipt of any request by the SEC or any other federal or state governmental authority for any additional information
relating to the Registration Statement or any amendment or supplement thereto or any related prospectus. The Company shall respond as
promptly as practicable to any comments received from the SEC with respect to each Registration Statement or any amendment thereto (it
being understood and agreed that the Company’s response to any such comments shall be delivered to the SEC no later than fifteen (15)
Business Days after the receipt thereof).
(g) The
Company shall (i) use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of each Registration
Statement or the use of any prospectus contained therein, or the suspension of the qualification, or the loss of an exemption from qualification,
of any of the Registrable Securities for sale in any jurisdiction and, if such an order or suspension is issued, to obtain the withdrawal
of such order or suspension at the earliest possible moment and (ii) notify Legal Counsel, legal counsel for each other Investor and each
Investor who holds Registrable Securities of the issuance of such order and the resolution thereof or its receipt of actual notice of
the initiation or threat of any proceeding for such purpose.
(h) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such
Investor consents to so being named an underwriter, at the request of any Investor, the Company shall furnish to such Investor, on the
date of the effectiveness of such Registration Statement and thereafter from time to time on such dates as an Investor may reasonably
request (i) a letter, dated such date, from the Company’s independent certified public accountants in form and substance as is customarily
given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the Investors, and
(ii) an opinion, dated as of such date, of counsel representing the Company for purposes of such Registration Statement, in form, scope
and substance as is customarily given in an underwritten public offering, addressed to the Investors.
8
(i) If
any Investor may be required under applicable securities law to be described in any Registration Statement as an underwriter and such
Investor consents to so being named an underwriter, upon the written request of such Investor, the Company shall make available for inspection
by (i) such Investor, (ii) legal counsel for such Investor and (iii) one (1) firm of accountants or other agents retained by such Investor
(collectively, the “Inspectors”), all pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably deemed necessary by each Inspector,
and cause the Company’s officers, directors and employees to supply all information which any Inspector may reasonably request;
provided, however, each Inspector shall agree in writing to hold in strict confidence and not to make any disclosure (except to such Investor)
or use of any Record or other information which the Company’s board of directors determines in good faith to be confidential, and
of which determination the Inspectors are so notified, unless (1) the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in any Registration Statement or is otherwise required under the 1933 Act, (2) the release of such Records is ordered pursuant
to a final, non-appealable subpoena or order from a court or government body of competent jurisdiction, or (3) the information in such
Records has been made generally available to the public other than by disclosure in violation of this Agreement or any other Transaction
Document (as defined in the Securities Purchase Agreement). Such Investor agrees that it shall, upon learning that disclosure of such
Records is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company
and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for,
the Records deemed confidential. Nothing herein (or in any other confidentiality agreement between the Company and such Investor, if any)
shall be deemed to limit any Investor’s ability to sell Registrable Securities in a manner which is otherwise consistent with applicable
laws and regulations.
(j) The
Company shall hold in confidence and not make any disclosure of information concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any Registration Statement or is otherwise required to be disclosed in such
Registration Statement pursuant to the 1933 Act, (iii) the release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such information has been made generally available
to the public other than by disclosure in violation of this Agreement or any other Transaction Document. The Company agrees that it shall,
upon learning that disclosure of such information concerning an Investor is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor, at such Investor’s expense,
to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(k) Without
limiting any obligation of the Company under the Securities Purchase Agreement, the Company shall use its best efforts either to (i) cause
all of the Registrable Securities covered by each Registration Statement to be listed on each securities exchange on which securities
of the same class or series issued by the Company are then listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, (ii) secure designation and quotation of all of the Registrable Securities covered by each Registration
Statement on an Eligible Market (as defined in the Securities Purchase Agreement), or (iii) if, despite the Company’s best efforts
to satisfy the preceding clauses (i) or (ii) the Company is unsuccessful in satisfying the preceding clauses (i) or (ii), without
limiting the generality of the foregoing, to use its best efforts to arrange for at least two market makers to register with the Financial
Industry Regulatory Authority (“FINRA”) as such with respect to such Registrable Securities. In addition, the Company
shall cooperate with each Investor and any broker or dealer through which any such Investor proposes to sell its Registrable Securities
in effecting a filing with FINRA pursuant to FINRA Rule 5110 as requested by such Investor. The Company shall pay all fees and expenses
in connection with satisfying its obligations under this Section 3(k).
(l) The
Company shall cooperate with the Investors who hold Registrable Securities being offered and, to the extent applicable, facilitate the
timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Securities to be offered
pursuant to a Registration Statement and enable such certificates to be in such denominations or amounts (as the case may be) as the Investors
may reasonably request from time to time and registered in such names as the Investors may request.
9
(m) If
requested by an Investor, the Company shall as soon as practicable after receipt of notice from such Investor and subject to Section 3(r)
hereof, (i) incorporate in a prospectus supplement or post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable Securities, including, without limitation, information with respect
to the number of Registrable Securities being offered or sold, the purchase price being paid therefor and any other terms of the offering
of the Registrable Securities to be sold in such offering; (ii) make all required filings of such prospectus supplement or post-effective
amendment after being notified of the matters to be incorporated in such prospectus supplement or post-effective amendment; and (iii)
supplement or make amendments to any Registration Statement or prospectus contained therein if reasonably requested by an Investor holding
any Registrable Securities.
(n) The
Company shall use its best efforts to cause the Registrable Securities covered by a Registration Statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(o) The
Company shall make generally available to its security holders as soon as practical, but not later than ninety (90) days after the close
of the period covered thereby, an earnings statement (in form complying with, and in the manner provided by, the provisions of Rule 158
under the 1933 Act) covering a twelve-month period beginning not later than the first day of the Company’s fiscal quarter next following
the applicable Effective Date of each Registration Statement.
(p) The
Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration
hereunder.
(q) Within
one (1) Business Day after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company
shall deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies
to the Investors whose Registrable Securities are included in such Registration Statement) confirmation that such Registration Statement
has been declared effective by the SEC in the form attached hereto as Exhibit A.
(r) Notwithstanding
anything to the contrary herein (but subject to the last sentence of this Section 3(r)), at any time after the Effective Date of
a particular Registration Statement, the Company may delay the disclosure of material, non-public information concerning the Company or
any of its Subsidiaries the disclosure of which at the time is not, in the good faith opinion of the board of directors of the Company,
in the best interest of the Company and, in the opinion of counsel to the Company, otherwise required (a “Grace Period”),
provided that the Company shall promptly notify the Investors in writing of the (i) existence of material, non-public information giving
rise to a Grace Period (provided that in each such notice the Company shall not disclose the content of such material, non-public information
to any of the Investors) and the date on which such Grace Period will begin and (ii) date on which such Grace Period ends, provided
further that (I) no Grace Period shall exceed ten (10) consecutive days and during any three hundred sixty five (365) day period all such
Grace Periods shall not exceed an aggregate of thirty (30) days, (II) the first day of any Grace Period must be at least five (5)
Trading Days after the last day of any prior Grace Period and (III) no Grace Period may exist during the sixty (60) Trading Day period
immediately following the Effective Date of such Registration Statement (provided that such sixty (60) Trading Day period shall be extended
by the number of Trading Days during such period and any extension thereof contemplated by this proviso during which such Registration
Statement is not effective or the prospectus contained therein is not available for use) (each, an “Allowable Grace Period”).
For purposes of determining the length of a Grace Period above, such Grace Period shall begin on and include the date the Investors receive
the notice referred to in clause (i) above and shall end on and include the later of the date the Investors receive the notice referred
to in clause (ii) above and the date referred to in such notice. The provisions of Section 3(g) hereof shall not be applicable during
the period of any Allowable Grace Period. Upon expiration of each Grace Period, the Company shall again be bound by the first sentence
of Section 3(f) with respect to the information giving rise thereto unless such material, non-public information is no longer applicable.
Notwithstanding anything to the contrary contained in this Section 3(r), the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale, and delivered a copy
of the prospectus included as part of the particular Registration Statement to the extent applicable, prior to such Investor’s receipt
of the notice of a Grace Period and for which the Investor has not yet settled.
10
(s) The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by each Investors of its Registrable
Securities pursuant to each Registration Statement.
(t) Neither
the Company nor any Subsidiary or affiliate thereof shall identify any Investor as an underwriter in any public disclosure or filing with
the SEC, the Principal Market or any Eligible Market and any Buyer being deemed an underwriter by the SEC shall not relieve the Company
of any obligations it has under this Agreement or any other Transaction Document (as defined in the Securities Purchase Agreement); provided,
however, that the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution”
section attached hereto as Exhibit B in the Registration Statement.
(u) Neither
the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after
the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights
granted to the Buyers in this Agreement or otherwise conflicts with the provisions hereof.
4. Obligations
of the Investors.
(a) At
least five (5) Business Days prior to the first anticipated filing date of each Registration Statement, the Company shall notify each
Investor in writing of the information the Company requires from each such Investor with respect to such Registration Statement. It shall
be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish to the Company such information regarding itself, the
Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as shall be reasonably
required to effect and maintain the effectiveness of the registration of such Registrable Securities and shall execute such documents
in connection with such registration as the Company may reasonably request.
(b) Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested
by the Company in connection with the preparation and filing of each Registration Statement hereunder, unless such Investor has notified
the Company in writing of such Investor’s election to exclude all of such Investor’s Registrable Securities from such Registration
Statement.
(c) Each
Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(g)
or the first sentence of Section 3(f), such Investor will immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such Investor’s receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3(g) or the first sentence of Section 3(f) or receipt of notice that no supplement
or amendment is required. Notwithstanding anything to the contrary in this Section 4(c), the Company shall cause its transfer agent
to deliver unlegended shares of Common Stock to a transferee of an Investor in accordance with the terms of the Securities Purchase Agreement
in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract for sale prior to
the Investor’s receipt of a notice from the Company of the happening of any event of the kind described in Section 3(g) or
the first sentence of Section 3(f) and for which such Investor has not yet settled.
5. Expenses
of Registration.
All expenses, other than underwriting
discounts and commissions, incurred in connection with the registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualifications fees, printers and accounting fees, FINRA filing fees (if
any) and fees and disbursements of counsel for the Company shall be paid by the Company. The Company shall reimburse Legal Counsel for
its fees and disbursements in connection with registration, filing or qualification pursuant to Sections 2 and 3 of this Agreement.
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6. Indemnification.
(a) To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend each Investor and each of
its directors, officers, stockholders, members, partners, employees, agents, advisors, representatives (and any other Persons with a functionally
equivalent role of a Person holding such titles notwithstanding the lack of such title or any other title) and each Person, if any, who
controls such Investor within the meaning of the 1933 Act or the 1934 Act and each of the directors, officers, stockholders, members,
partners, employees, agents, advisors, representatives (and any other Persons with a functionally equivalent role of a Person holding
such titles notwithstanding the lack of such title or any other title) of such controlling Persons (each, an “Indemnified Person”),
against any losses, obligations, claims, damages, liabilities, contingencies, judgments, fines, penalties, charges, costs (including,
without limitation, court costs, reasonable attorneys’ fees and costs of defense and investigation), amounts paid in settlement
or expenses, joint or several, (collectively, “Claims”) incurred in investigating, preparing or defending any action,
claim, suit, inquiry, proceeding, investigation or appeal taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened, whether or not an Indemnified Person is or may be a party
thereto (“Indemnified Damages”), to which any of them may become subject insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement
of a material fact in a Registration Statement or any post-effective amendment thereto or in any filing made in connection with the qualification
of the offering under the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered
(“Blue Sky Filing”), or the omission or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue statement or alleged untrue statement of a material fact contained
in any preliminary prospectus if used prior to the effective date of such Registration Statement, or contained in the final prospectus
(as amended or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement or (iv) any violation of this Agreement (the matters in the foregoing
clauses (i) through (iv) being, collectively, “Violations”). Subject to Section 6(c), the Company shall reimburse
the Indemnified Persons, promptly as such expenses are incurred and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained herein,
the indemnification agreement contained in this Section 6(a): (i) shall not apply to a Claim by an Indemnified Person arising out
of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by such
Indemnified Person for such Indemnified Person expressly for use in connection with the preparation of such Registration Statement or
any such amendment thereof or supplement thereto, if such prospectus was timely made available by the Company pursuant to Section 3(d);
and (ii) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of
the Company, which consent shall not be unreasonably withheld or delayed. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person and shall survive the transfer of any of the Registrable Securities
by any of the Investors pursuant to Section 9.
(b) In
connection with any Registration Statement in which an Investor is participating, such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement and each Person, if any, who controls the Company within the meaning of the
1933 Act or the 1934 Act (each, an “Indemnified Party”), against any Claim or Indemnified Damages to which any of them
may become subject, under the 1933 Act, the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or are based
upon any Violation, in each case, to the extent, and only to the extent, that such Violation occurs in reliance upon and in conformity
with written information furnished to the Company by such Investor expressly for use in connection with such Registration Statement; and,
subject to Section 6(c) and the below provisos in this Section 6(b), such Investor will reimburse an Indemnified Party any legal
or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such Claim; provided,
however, the indemnity agreement contained in this Section 6(b) and the agreement with respect to contribution contained in Section 7
shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written consent of such Investor,
which consent shall not be unreasonably withheld or delayed, provided further that such Investor shall be liable under this Section 6(b)
for only that amount of a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the applicable
sale of Registrable Securities pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such Indemnified Party and shall survive the transfer of any of the Registrable Securities
by any of the Investors pursuant to Section 9.
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(c) Promptly
after receipt by an Indemnified Person or Indemnified Party (as the case may be) under this Section 6 of notice of the commencement
of any action or proceeding (including, without limitation, any governmental action or proceeding) involving a Claim, such Indemnified
Person or Indemnified Party (as the case may be) shall, if a Claim in respect thereof is to be made against any indemnifying party under
this Section 6, deliver to the indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly
noticed, to assume control of the defense thereof with counsel mutually satisfactory to the indemnifying party and the Indemnified Person
or the Indemnified Party (as the case may be); provided, however, an Indemnified Person or Indemnified Party (as the case may be) shall
have the right to retain its own counsel with the fees and expenses of such counsel to be paid by the indemnifying party if: (i) the indemnifying
party has agreed in writing to pay such fees and expenses; (ii) the indemnifying party shall have failed promptly to assume the defense
of such Claim and to employ counsel reasonably satisfactory to such Indemnified Person or Indemnified Party (as the case may be) in any
such Claim; or (iii) the named parties to any such Claim (including, without limitation, any impleaded parties) include both such Indemnified
Person or Indemnified Party (as the case may be) and the indemnifying party, and such Indemnified Person or such Indemnified Party (as
the case may be) shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Person or such Indemnified Party and the indemnifying party (in which case, if such Indemnified Person or such Indemnified
Party (as the case may be) notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the
indemnifying party, then the indemnifying party shall not have the right to assume the defense thereof and such counsel shall be at the
expense of the indemnifying party, provided further that in the case of clause (iii) above the indemnifying party shall not be responsible
for the reasonable fees and expenses of more than one (1) separate legal counsel for such Indemnified Person or Indemnified Party (as
the case may be). The Indemnified Party or Indemnified Person (as the case may be) shall reasonably cooperate with the indemnifying party
in connection with any negotiation or defense of any such action or Claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Indemnified Party or Indemnified Person (as the case may be) which relates to such action
or Claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person (as the case may be) reasonably apprised at all
times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its prior written consent; provided, however, the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified
Party or Indemnified Person (as the case may be), consent to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party or Indemnified Person
(as the case may be) of a release from all liability in respect to such Claim or litigation, and such settlement shall not include any
admission as to fault on the part of the Indemnified Party. Following indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or Indemnified Person (as the case may be) with respect to all third parties,
firms or corporations relating to the matter for which indemnification has been made. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party (as the case may be) under this Section 6, except to the extent that the indemnifying party
is materially and adversely prejudiced in its ability to defend such action.
(d) The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The
indemnity and contribution agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified
Party or Indemnified Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to
pursuant to the law.
7. Contribution.
To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however:
(i) no contribution shall be made under circumstances where the maker would not have been liable for indemnification under the fault standards
set forth in Section 6 of this Agreement, (ii) no Person involved in the sale of Registrable Securities which Person is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in connection with such sale shall be
13
entitled to contribution
from any Person involved in such sale of Registrable Securities who was not guilty of fraudulent misrepresentation; and (iii) contribution
by any seller of Registrable Securities shall be limited in amount to the amount of net proceeds received by such seller from the applicable
sale of such Registrable Securities pursuant to such Registration Statement. Notwithstanding the provisions of this Section 7, no
Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by which the net proceeds actually received
by such Investor from the applicable sale of the Registrable Securities subject to the Claim exceeds the amount of any damages that such
Investor has otherwise been required to pay, or would otherwise be required to pay under Section 6(b), by reason of such untrue or
alleged untrue statement or omission or alleged omission.
8. Reports
Under the 1934 Act.
With a view to making available
to the Investors the benefits of Rule 144, the Company agrees to:
(a) make
and keep public information available, as those terms are understood and defined in Rule 144;
(b) file
with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements (it being understood and agreed that nothing herein shall limit any obligations of the
Company under the Securities Purchase Agreement) and the filing of such reports and other documents is required for the applicable provisions
of Rule 144; and
(c) furnish
to each Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement by the Company,
if true, that it has complied with the reporting, submission and posting requirements of Rule 144, the 1933 Act and the 1934 Act, (ii)
a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company with
the SEC if such reports are not publicly available via EDGAR, and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without registration.
9. Assignment
of Registration Rights.
All or any portion of the rights
under this Agreement shall be automatically assignable by each Investor to any transferee or assignee (as the case may be) of all or any
portion of such Investor’s Registrable Securities or Notes if: (i) such Investor agrees in writing with such transferee or assignee
(as the case may be) to assign all or any portion of such rights, and a copy of such agreement is furnished to the Company within a reasonable
time after such transfer or assignment (as the case may be); (ii) the Company is, within a reasonable time after such transfer or assignment
(as the case may be), furnished with written notice of (a) the name and address of such transferee or assignee (as the case may be), and
(b) the securities with respect to which such registration rights are being transferred or assigned (as the case may be); (iii) immediately
following such transfer or assignment (as the case may be) the further disposition of such securities by such transferee or assignee (as
the case may be) is restricted under the 1933 Act or applicable state securities laws if so required; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence such transferee or assignee (as the case may be) agrees in writing
with the Company to be bound by all of the provisions contained herein; (v) such transfer or assignment (as the case may be) shall have
been made in accordance with the applicable requirements of the Securities Purchase Agreement and the Notes (as the case may be); and
(vi) such transfer or assignment (as the case may be) shall have been conducted in accordance with all applicable federal and state securities
laws.
10. Amendment
of Registration Rights.
Provisions
of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively
or prospectively), only with the written consent of the Company and the Required Holders; provided that any such amendment or waiver that
complies with the foregoing, but that disproportionately, materially and adversely affects the rights and obligations of any Investor
relative to the comparable rights and obligations of the other Investors shall require the prior written consent of such adversely affected
Investor. Any amendment or waiver effected in accordance with this Section 10 shall be binding upon each Investor and the Company,
14
provided
that no such amendment shall be effective to the extent that it (1) applies to less than all of the holders of Registrable Securities
or (2) imposes any obligation or liability on any Investor without such Investor’s prior written consent (which may be granted or
withheld in such Investor’s sole discretion). No waiver shall be effective unless it is in writing and signed by an authorized representative
of the waiving party. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision
of this Agreement unless the same consideration (other than the reimbursement of legal fees) also is offered to all of the parties to
this Agreement.
11. Miscellaneous.
(a) Solely
for purposes of this Agreement, a Person is deemed to be a holder of Registrable Securities whenever such Person owns, or is deemed to
own, of record such Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election received from
such record owner of such Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by electronic mail
(provided that such sent email is kept on file (whether electronically or otherwise) by the sending party and the sending party does not
receive an automatically generated message from the recipient’s email server that such e-mail could not be delivered to such recipient);
or (iii) one (1) Business Day after deposit with an overnight courier service with next day delivery specified, in each case, properly
addressed to the party to receive the same. The mailing addresses and e-mail addresses for such communications shall be:
If to the Company:
Sadot Group Inc.
295 E. Renfro Street, Suite 300
Burleson, Texas 76028
Telephone: (832) 604-9568
Attention: Haggai Ravid, Chief Executive Officer
E-Mail: haggai.ravid@sadotco.com
With a copy (for informational purposes only) to:
Fleming PLLC
30 Wall Street, 8th Floor
New York, New York 10005
Telephone: (516) 902-6567
Attention: Stephen M. Fleming, Esq.
E-Mail: smf@flemingpllc.com
If to the Transfer Agent:
Computershare, Inc.
6200 S. Quebec St.
Greenwood Village, Colorado
80111
Telephone: (303) 262-0702
E-mail: Jennifer.Lippoldt@computershare.com
If to the Lead Buyer:
[•]
Attention: [•]
E-Mail: [•]
15
If to Legal Counsel:
Sullivan & Worcester
LLP
1251 Avenue of the Americas
New York, New York 10020
Telephone: (212) 660-3060
Attention: David E.
Danovitch, Esq.
E-mail: ddanovitch@sullivanlaw.com
If to a Buyer, to its mailing address
and/or email address set forth on the Schedule of Buyers attached to the Securities Purchase Agreement, with copies to such Buyer’s
representatives as set forth on the Schedule of Buyers, or to such other mailing address and/or email address and/or to the attention
of such other Person as the recipient party has specified by written notice given to each other party five (5) days prior to the effectiveness
of such change, provided that Sullivan & Worcester LLP shall only be provided notices sent to the lead investor. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s e-mail containing the time, date and recipient’s e-mail or (C) provided by a courier or overnight
courier service shall be rebuttable evidence of personal service, receipt by e-mail or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above, respectively.
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof. The Company and each Investor acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that each party hereto shall be entitled to an injunction or injunctions to prevent or cure breaches of the provisions
of this Agreement by any other party hereto and to enforce specifically the terms and provisions hereof (without the necessity of showing
economic loss and without any bond or other security being required), this being in addition to any other remedy to which any party may
be entitled by law or equity.
(d) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Nevada
or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Nevada. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of Las Vegas, Clark County,
State of Nevada for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents
to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for such notices
to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(e) If
any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction,
the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that
it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining
provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question
does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the
benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited,
invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited,
invalid or unenforceable provision(s).
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(f) This
Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced herein
and therein constitute the entire agreement among the parties hereto and thereto solely with respect to the subject matter hereof and
thereof. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein.
This Agreement, the other Transaction Documents, the schedules and exhibits attached hereto and thereto and the instruments referenced
herein and therein supersede all prior agreements and understandings among the parties hereto solely with respect to the subject matter
hereof and thereof; provided, however, nothing contained in this Agreement or any other Transaction Document shall (or shall be deemed
to) (i) have any effect on any agreements any Investor has entered into with the Company or any of its Subsidiaries prior to the date
hereof with respect to any prior investment made by such Investor in the Company, (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries or any rights of or benefits to any Investor or any other Person in any agreement
entered into prior to the date hereof between or among the Company and/or any of its Subsidiaries and any Investor and all such agreements
shall continue in full force and effect or (iii) limit any obligations of the Company under any of the other Transaction Documents.
(g) Subject
to compliance with Section 9 (if applicable), this Agreement shall inure to the benefit of and be binding upon the permitted successors
and assigns of each of the parties hereto. This Agreement is not for the benefit of, nor may any provision hereof be enforced by, any
Person, other than the parties hereto, their respective permitted successors and assigns and the Persons referred to in Sections 6
and 7 hereof.
(h) The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. Unless the
context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural
forms thereof. The terms “including,” “includes,” “include” and words of like import shall be construed
broadly as if followed by the words “without limitation.” The terms “herein,” “hereunder,” “hereof”
and words of like import refer to this entire Agreement instead of just the provision in which they are found.
(i) This
Agreement may be executed in two or more identical counterparts, each of which shall be deemed an original, but all of which shall be
considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the
other party. In the event that any signature is delivered by facsimile transmission or by an email which contains a portable document
format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing
(or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.
(j) Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents as any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(k) The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party. Notwithstanding anything to the contrary set forth in Section 10, terms used in
this Agreement but defined in the other Transaction Documents shall have the meanings ascribed to such terms on the Initial Closing Date
in such other Transaction Documents unless otherwise consented to in writing by each Investor.
(l) All
consents and other determinations required to be made by the Investors pursuant to this Agreement shall be made, unless otherwise specified
in this Agreement, by the Required Holders, determined as if all of the outstanding Notes then held by the Investors have been converted
for Registrable Securities without regard to any limitations on redemption, amortization and/or conversion of the Notes then held by Investors.
(m) This
Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
17
(n) The
obligations of each Investor under this Agreement and the other Transaction Documents are several and not joint with the obligations of
any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under
this Agreement or any other Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by
any Investor pursuant hereto or thereto, shall be deemed to constitute the Investors as, and the Company acknowledges that the Investors
do not so constitute, a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that
the Investors are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated
by the Transaction Documents or any matters, and the Company acknowledges that the Investors are not acting in concert or as a group,
and the Company shall not assert any such claim, with respect to such obligations or the transactions contemplated by this Agreement or
any of the other the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Agreement or out of any other Transaction Documents, and it shall not be necessary
for any other Investor to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect
to the obligations of the Company contained herein was solely in the control of the Company, not the action or decision of any Investor,
and was done solely for the convenience of the Company and not because it was required or requested to do so by any Investor. It is expressly
understood and agreed that each provision contained in this Agreement and in each other Transaction Document is between the Company and
an Investor, solely, and not between the Company and the Investors collectively and not between and among Investors.
[SIGNATURE PAGE FOLLOWS]
18
IN WITNESS WHEREOF, each Buyer and the Company
have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
COMPANY:
SADOT GROUP INC.
By:
Name:
Title:
IN WITNESS WHEREOF, each Buyer and the Company
have caused their respective signature page to this Registration Rights Agreement to be duly executed as of the date first written above.
BUYERS:
[ ]
By:
Name:
Title:
SCHEDULE A
Name of Buyers
Number of shares of Common Stock
Total
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
______________________
______________________
______________________
Attention: _____________
Re: Sadot Group Inc.
Ladies and Gentlemen:
[We are][I am] counsel to Sadot
Group Inc., a Nevada corporation (the “Company”), and have represented the Company in connection with that certain
Securities Purchase Agreement (the “Securities Purchase Agreement”) entered into by and among the Company and the buyers
named therein (collectively, the “Holders”) pursuant to which the Company issued to the Holders senior secured convertible
notes (the “Notes”) convertible into shares of the Company’s common stock, $0.0001 par value per share (the “Common
Stock”), Pursuant to the Securities Purchase Agreement, the Company also has entered into a Registration Rights Agreement with
the Holders (the “Registration Rights Agreement”) pursuant to which the Company agreed, among other things, to register
the Registrable Securities (as defined in the Registration Rights Agreement), including the shares of Common Stock issuable upon conversion
of the Notes under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s
obligations under the Registration Rights Agreement, on ____________ ___, 20__, the Company filed a Registration Statement on Form [S-1][S-3]
(File No. 333-_____________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”)
relating to the Registrable Securities which names each of the Holders as a selling stockholder thereunder.
In connection with the foregoing,
[we][I] advise you that [a member of the SEC’s staff has advised [us][me] by telephone that [the SEC has entered an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] [an order declaring
the Registration Statement effective under the 1933 Act at [ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS]] has been posted
on the web site of the SEC at www.sec.gov] and [we][I] have no knowledge, after a review of information posted on the website of the SEC
at http://www.sec.gov/litigation/stoporders.shtml, that any stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933
Act pursuant to the Registration Statement.
This letter shall serve as our
standing opinion to you that the shares of Common Stock underlying the Notes are freely transferable by the Holders pursuant to the Registration
Statement. You need not require further letters from us to effect any future legend-free issuance or reissuance of such shares of Common
Stock to the Holders as contemplated by the Company’s Irrevocable Transfer Agent Instructions dated _________ __, 20__.
Very truly yours,
[ISSUER’S COUNSEL]
By:
CC:
[ ]
[OTHER BUYERS]
EXHIBIT B
SELLING STOCKHOLDERS
The shares of Common Stock being
offered by the selling stockholders are those issuable to the selling stockholders upon conversion of the notes. For additional information
regarding the issuance of the notes, see “Private Placement of Notes” above. We are registering the shares of Common Stock
in order to permit the selling stockholders to offer the shares for resale from time to time. Except for the ownership of the notes issued
pursuant to the Securities Purchase Agreement, the selling stockholders have not had any material relationship with us within the past
three years.
The table below lists the selling
stockholders and other information regarding the beneficial ownership (as determined under Section 13(d) of the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder) of the shares of Common Stock held by each of the selling stockholders.
The second column lists the number of shares of Common Stock beneficially owned by the selling stockholders, based on their respective
ownership of shares of Common Stock and notes, as of ________, 20__, assuming conversion of the notes held by each such selling stockholder
on that date but taking account of any limitations on conversion and exercise set forth therein.
The third column lists the shares
of Common Stock being offered by this prospectus by the selling stockholders and does not take in account any limitations on conversion
of the notes set forth therein.
In accordance with the terms of
a registration rights agreement with the holders of the notes, this prospectus generally covers the resale of 100% of the maximum number
of shares of Common Stock issued or issuable pursuant to the notes, including payment of interest on the notes through [DATE], determined
as if the outstanding notes (including interest on the notes through [DATE]) were converted in full (without regard to any limitations
on conversion contained therein solely for the purpose of such calculation) at the $[ ] floor price of the notes then in effect calculated
as of the trading day immediately preceding the date this registration statement was initially filed with the SEC. Because the conversion
price and alternate conversion price of the notes may be adjusted, the number of shares that will actually be issued may be more or less
than the number of shares being offered by this prospectus. The fourth column assumes the sale of all of the shares offered by the selling
stockholders pursuant to this prospectus.
Under the terms of the notes, a
selling stockholder may not convert the notes to the extent (but only to the extent) such selling stockholder or any of its affiliates
would beneficially own a number of shares of Common Stock which would exceed 4.99% of the outstanding shares of the Company. The number
of shares in the second column reflects these limitations. The selling stockholders may sell all, some or none of their shares in this
offering. See “Plan of Distribution.”
Name of Selling Stockholder
Number of shares of Common Stock Owned Prior to Offering
Maximum Number of shares of Common Stock to be Sold Pursuant to this Prospectus
Number of shares of Common Stock of Owned After Offering
[•] (1)
[OTHER BUYERS]
(1) [ ]
PLAN OF DISTRIBUTION
We are registering the shares of
Common Stock issuable upon conversion of the notes to permit the resale of these shares of Common Stock by the holders of the notes from
time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling stockholders of the
shares of Common Stock . We will bear all fees and expenses incident to our obligation to register the shares of Common Stock.
The selling stockholders may sell
all or a portion of the shares of Common Stock held by them and offered hereby from time to time directly or through one or more underwriters,
broker-dealers or agents. If the shares of Common Stock are sold through underwriters or broker-dealers, the selling stockholders will
be responsible for underwriting discounts or commissions or agent’s commissions. The shares of Common Stock may be sold in one or
more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale
or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one
or more of the following methods:
· on any national securities exchange or quotation service on which the securities may be listed or quoted
at the time of sale;
· in the over-the-counter market;
· in transactions otherwise than on these exchanges or systems or in the over-the-counter market;
· through the writing or settlement of options, whether such options are listed on an options exchange or
otherwise;
· ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
· block trades in which the broker-dealer will attempt to sell the shares as agent but may position and
resell a portion of the block as principal to facilitate the transaction;
· purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
· an exchange distribution in accordance with the rules of the applicable exchange;
· privately negotiated transactions;
· short sales made after the date the Registration Statement is declared effective by the SEC;
· broker-dealers may agree with a selling security holder to sell a specified number of such shares at a
stipulated price per share;
· a combination of any such methods of sale; and
· any other method permitted pursuant to applicable law.
The selling stockholders may also
sell shares of Common Stock under Rule 144 promulgated under the Securities Act of 1933, as amended, if available, rather than under
this prospectus. In addition, the selling stockholders may transfer the shares of Common Stock by other means not described in this prospectus.
If the selling stockholders effect such transactions by selling shares of Common Stock to or through underwriters, broker-dealers or agents,
such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling
stockholders or commissions from purchasers of the shares of Common Stock for whom they may act as agent or to whom they may sell as principal
(which discounts, concessions or commissions as to particular underwriters,
broker-dealers or agents may be in excess of those customary
in the types of transactions involved). In connection with sales of the shares of Common Stock or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the shares of Common Stock in the
course of hedging in positions they assume. The selling stockholders may also sell shares of Common Stock short and deliver shares of
Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales.
The selling stockholders may also loan or pledge shares of Common Stock to broker-dealers that in turn may sell such shares.
The selling stockholders may pledge
or grant a security interest in some or all of the notes or shares of Common Stock owned by them and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and sell the shares of Common Stock from time to time pursuant
to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending,
if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. The selling stockholders also may transfer and donate the shares of Common Stock in other circumstances in which
case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
To the extent required by the Securities
Act and the rules and regulations thereunder, the selling stockholders and any broker-dealer participating in the distribution of the
shares of Common Stock may be deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid,
or any discounts or concessions allowed to, any such broker-dealer may be deemed to be underwriting commissions or discounts under the
Securities Act. At the time a particular offering of the shares of Common Stock is made, a prospectus supplement, if required, will be
distributed, which will set forth the aggregate amount of shares of Common Stock being offered and the terms of the offering, including
the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling
stockholders and any discounts, commissions or concessions allowed or re-allowed or paid to broker-dealers.
Under the securities laws of some
states, the shares of Common Stock may be sold in such states only through registered or licensed brokers or dealers. In addition, in
some states the shares of Common Stock may not be sold unless such shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied with.
There can be no assurance that
any selling stockholder will sell any or all of the shares of Common Stock registered pursuant to the registration statement, of which
this prospectus forms a part.
The selling stockholders and any
other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act,
which may limit the timing of purchases and sales of any of the shares of Common Stock by the selling stockholders and any other participating
person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of
Common Stock to engage in market-making activities with respect to the shares of Common Stock. All of the foregoing may affect the marketability
of the shares of Common Stock and the ability of any person or entity to engage in market-making activities with respect to the shares
of Common Stock.
We will pay all expenses of the
registration of the shares of Common Stock pursuant to the registration rights agreement, estimated to be $[ ] in total, including, without
limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky”
laws; provided, however, a selling stockholder will pay all underwriting discounts and selling commissions, if any. We will indemnify
the selling stockholders against liabilities, including some liabilities under the Securities Act in accordance with the registration
rights agreements or the selling stockholders will be entitled to contribution. We may be indemnified by the selling stockholders against
civil liabilities, including liabilities under the Securities Act that may arise from any written information furnished to us by the selling
stockholder specifically for use in this prospectus, in accordance with the related registration rights agreements or we may be entitled
to contribution.
Once sold under the registration
statement, of which this prospectus forms a part, the shares of Common Stock will be freely tradable in the hands of persons other than
our affiliates.
EX-10.4 — EXHIBIT 10.4
EX-10.4
Filename: e7788_ex10-4.htm · Sequence: 8
EXHIBIT 10.4
SECURITY AND PLEDGE
AGREEMENT
SECURITY AND PLEDGE AGREEMENT,
dated as of July 16, 2026 (this “Agreement”), made by Sadot Group Inc., a Nevada corporation, with offices located
at 295 E. Renfro Street, Suite 300, Burleson, Texas 76028 (the “Company”), and each of the direct and indirect Subsidiaries
(as defined below) of the Company, if any, from time to time party hereto (together with the Company, each a “Grantor”
and, collectively, the “Grantors”), in favor of [•], with an office located at One Penn, 1 Pennsylvania Plaza,
Suite 4810, New York, New York 10119, in its capacity as collateral agent (together with its successors and assignees, in such capacity,
the “Collateral Agent”) for the Noteholders (as defined below) party to the Securities Purchase Agreement (as defined
below).
W I T N E S S E T H:
WHEREAS, the Company is party to
that certain Securities Purchase Agreement, dated as of the date hereof, (as amended, modified, supplemented, extended, renewed, restated
or replaced from time to time in accordance with the terms thereof, the “Securities Purchase Agreement”) by and among
the Company and each party listed as a “Buyer” on the Schedule of Buyers attached thereto (each a “Buyer”
and collectively, the “Buyers”), pursuant to which the Company shall be required to sell, and the Buyers shall purchase
or have the right to purchase, the Notes (as defined in the Securities Purchase Agreement) issued pursuant thereto (as such Notes may
be amended, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with the terms thereof, collectively,
the “Notes”);
WHEREAS, certain Grantors (other
than the Company) from time to time (each a “Guarantor” and collectively, the “Guarantors”) may
execute and deliver one or more guarantees (each, a “Guaranty” and collectively, the “Guaranties”)
in form and substance acceptable to and in favor of the Collateral Agent, for the ratable benefit of itself and the Noteholders, with
respect to the Company’s obligations under the Securities Purchase Agreement, the Notes and the other Transaction Documents (as
defined in the Securities Purchase Agreement);
WHEREAS, it is a condition precedent
to the Buyers’ obligation to purchase the Notes that the Grantors shall have executed and delivered to the Collateral Agent this
Agreement providing for the grant to the Collateral Agent, for the ratable benefit of itself and the Noteholders, of a valid, enforceable,
and perfected security interest in all assets of each Grantor to secure all of the Company’s obligations under the Transaction Documents
and the Guarantors’ obligations under the Guaranties, as applicable; and
WHEREAS, the Grantors are Affiliates
that are part of a common enterprise such that each Grantor will derive substantial direct and indirect financial and other benefits from
the consummation of the transactions contemplated under the Transaction Documents and, accordingly, the consummation of such transactions
are in the best interests of each Grantor;
NOW, THEREFORE, in consideration
of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities Purchase Agreement, each Grantor
agrees with the Collateral Agent, for the ratable benefit of the Collateral Agent and the Noteholders, as follows:
Section
1. Definitions.
(a) Reference
is hereby made to the Securities Purchase Agreement and the Notes for a statement of the terms thereof. All terms used in this Agreement
and the recitals hereto which are defined in the Securities Purchase Agreement, the Notes or in the Code, and which are not otherwise
defined herein shall have the same meanings herein as set forth therein; provided that terms used herein which are defined in the
Code on the date hereof shall continue to have the same meaning notwithstanding any replacement or amendment of the Code except (i) to
the extent that the Code of any particular jurisdiction has been or shall be amended to incorporate provisions based upon or substantially
similar to the 2022 Amendments, references to terms defined in (or amended by) such amendments are used (or shall be used, as of the date
of such amendments) herein as so defined (or amended) as adopted by and in effect in such jurisdiction, (ii) to the extent that the Code
of any particular jurisdiction has not been amended to incorporate provisions based upon or substantially similar to the 2022 Amendments,
references to terms defined in the 2022 Amendments shall be used herein with respect to such jurisdiction as if the Code of such jurisdiction
were amended to incorporate the provisions of the 2022 Amendments as provided in the 2022 Amendments and (iii) as the Collateral Agent
may otherwise determine in its sole and absolute discretion.
(b) Without
limiting the generality of, and subject to the proviso at the end of, Section 1(a) of this Agreement, the following terms shall have the
respective meanings provided for in the Code: “Accounts”, “Account Debtor”, “Cash Proceeds”, “Certificate
of Title”, “Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”,
“Deposit Account”, “Documents”, “Electronic Chattel Paper”, “Electronic Document”, “Electronic
Money”, “Equipment”, “Financial Assets”, “Fixtures”, “General Intangibles”, “Goods”,
“Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Noncash
Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Security”, “Record”,
“Security Account”, “Security Entitlement”, “Software”, “Supporting Obligations” and “Uncertificated
Securities”.
(c) As
used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally
to both the singular and plural forms of such terms:
“2022 Amendments”
means the Uniform Commercial Code Amendments (2022) approved and recommended for enactment in all the states by the Uniform Law Commission
(Nat’l Conf. of Commissioners on Unif. State Laws, 2022).
“Affiliate”
of any Person means any other Person which, directly or indirectly, controls or is controlled by or is under common control with such
Person and any officer or director of such Person. Without limiting the generality of the foregoing, a Person shall be deemed to be “controlled
by” any other Person if such Person possesses, directly or indirectly, power to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managers or power to direct or cause the direction of the management
and policies of such Person, whether by contract or otherwise.
“Article 12 Collateral”
means all assets of the Grantors consisting of (i) controllable accounts, (ii) controllable electronic records, (iii) controllable payment
intangibles, (iv) Electronic Chattel Paper, (v) Electronic Documents and (vi) Electronic Money, in each case, including, without limitation,
all of the foregoing types of Collateral located or stored in a Custodial Account, regardless of whether the Custodian maintaining such
Custodial Account has agreed to treat such Collateral located or stored in such Custodial Account as “financial assets” (within
the meaning of Article 8 of the Uniform Commercial Code of the applicable jurisdiction).
“Bankruptcy Code”
means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy, insolvency
or similar laws).
“Bankruptcy Event of Default”
shall have the meaning set forth in the Notes.
“Business Day”
means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to
remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain
closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders
or restrictions or the closure of any physical branch locations at the direction of any Governmental Authority so long as the electronic
funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers
on such day.
“Buyer” or “Buyers”
shall have the meaning set forth in the recitals hereto.
“Capital Stock”
means (i) with respect to any Person that is a corporation or a company, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other
securities exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is
not an individual or a corporation, any and all partnership, membership, trust or other equity interests of such Person.
“Closing Date”,
“Initial Closing Date” and “Additional Closing Date” shall have the respective meanings set forth
in the Securities Purchase Agreement.
2
“Code” means
the Uniform Commercial Code as in effect from time to time in the State of New York; provided that, if perfection or the effect
of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code
as in effect in a jurisdiction other than the State of New York, “Code” means the Uniform Commercial Code as in effect from
time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection
or priority.
“Collateral”
shall have the meaning set forth in Section 3(a) of this Agreement.
“Collateral Agent”
shall have the meaning set forth in the preamble hereto.
“Company” shall
have the meaning set forth in the preamble hereto.
“Control” means
(i) with respect to any deposit account, “control”, within the meaning of Section 9-104 of the Code, (ii) with respect to
any securities account, security entitlement, commodity contract or commodity account, control within the meaning of Section 9-106 of
the Code, (iii) with respect to any uncertificated security, control within the meaning of Section 8-106(c) of the Code, (iv) with respect
to any certificated security, control within the meaning of Section 8-106(a) or (b) of the Code, (v) with respect to any Electronic Chattel
Paper, control within the meaning of Section 9-105 of the Code, (vi) with respect to any Electronic Documents, control within the meaning
of Section 7-106 of the Code, (vii) with respect to any Controllable Electronic Record, control within the meaning of Section 12-105 of
the Code, (viii) with respect to letter-of-credit rights, control within the meaning of Section 9-107 of the Code, (ix) with respect to
any Transferable Record, control within the meaning of Section 201 of the Federal Electronic Signatures in Global and National Commerce
Act or in Section 16 of the UETA as in effect in the jurisdiction relevant to such Transferable Record, and (x) with respect to money,
insofar as not otherwise covered under clauses (i) through (ix), the possession or legal right to possess and exercise exclusive control
with respect to such money by way of exercise of power of attorney, right to assignment, escrow agreement, irrevocable letter of direction,
physical possession or other right or power granted to the Collateral Agent by the applicable Grantor.
“Controlled Accounts”
means the Deposit Accounts, Commodity Accounts, Securities Accounts, Foreign Currency Controlled Account and/or Custodial Accounts of
the Grantors listed on Schedule IV attached hereto.
“Copyright Licenses”
means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to use or sell any works covered by any Copyright (including, without limitation, all Copyright Licenses set forth
in Schedule II hereto).
“Copyrights”
means all domestic and foreign copyrights, whether registered or not, including, without limitation, all copyright rights throughout the
universe (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of
authorship fixed in any tangible medium of expression, acquired or used by any Grantor (including, without limitation, all copyrights
described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications,
registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other
country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals
thereof.
“Custodial Accounts”
means any Deposit Account, Securities Account, location, wallet, address, or storage device used as the location at which Collateral is
located, including, without limitation, all wallets and similar accounts maintained with a Custodian.
“Custodian”
means any custodian, securities intermediary, brokerage, exchange or other Person who provides brokerage account, deposit account, securities
account, or other similar treasury, account (including electronic wallets) or cash (whether tangible or electronic) management services
for purposes of maintaining, holding, trading, receiving, disposing or otherwise conducting transactions involving Collateral.
3
“Custodian Control Agreement”
means an agreement in writing, in form and substance reasonably satisfactory to Collateral Agent, which (i) applies to Collateral of a
Grantor maintained or held with any Custodian; (ii) to the extent applicable to the particular Collateral, contains an election by such
Custodian to treat such Collateral as “financial assets” (within the meaning of Article 8 of the Code of the applicable jurisdiction);
(iii) provides that such Custodian (A) agrees that it will comply with instructions relating to such Collateral from Collateral Agent
(including, without limitation, instructions originated by Collateral Agent directing the transfer or redemption of the Collateral in
the account without further consent by such Grantor) and (B) waives any lien, security interest or right of setoff it may have with respect
to such Collateral; (iv) provides that Collateral Agent shall obtain Control of such Collateral; (v) contains an acknowledgment from such
Custodian of Collateral Agent’s first priority lien; and (vi) otherwise ensures Collateral Agent’s Control over, and the continued
perfection and priority of Collateral Agent’s security interest in, any of the Collateral and the preservation of its rights therein.
“Domestic Subsidiary”
means any Subsidiary other than a Foreign Subsidiary.
“Event of Default”
shall have the meaning set forth in Section 4(a) of the Notes.
“Excluded Collateral”
means such portion of the voting Capital Stock of any Foreign Subsidiary in excess of 65% of the issued and outstanding voting Capital
Stock of such Foreign Subsidiary at any time the pledging of more than 65% of the total outstanding voting Capital Stock of such Foreign
Subsidiary would result in a material adverse tax consequence to a Grantor.
“Foreign Currency Controlled
Accounts” means any Controlled Account of a Grantor or any of its Subsidiaries holding a deposit denominated in a currency other
than United States dollar.
“Foreign Subsidiary”
means any Subsidiary of a Grantor organized under the laws of a jurisdiction other than the United States, any of the states thereof,
Puerto Rico or the District of Columbia.
“GAAP” means
U.S. generally accepted accounting principles consistently applied.
“Governmental Authority”
means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political subdivision thereof
or thereto and any department, commission, board, bureau, court, tribunal, instrumentality, agency or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed Obligations”
shall have the meaning set forth in Section 2 of each Guaranty.
“Guarantor”
or “Guarantors” shall have the meaning set forth in the recitals hereto.
“Guaranty” or
“Guaranties” shall have the meaning set forth in the recitals hereto.
“Insolvency Proceeding”
means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency
law or law for the relief of debtors, any proceeding relating to assignments for the benefit of creditors, formal or informal moratoria,
compositions, or extensions generally with creditors, or any proceeding seeking reorganization, arrangement, or other similar relief.
“Intellectual Property”
means, collectively, all intellectual property rights and assets, and all rights, interests and protections that are associated with,
similar to, or required for the exercise of, any of the foregoing, however arising, under the applicable laws of any jurisdiction throughout
the world, whether registered or unregistered, including, without limitation, any and all: (a) Trademarks; (b) internet domain names,
whether or not trademarks, registered in any top-level domain by any authorized private registrar or Governmental Authority, web addresses,
web pages, websites and related content; (c) accounts with YouTube, LinkedIn, Twitter, Instagram, Facebook and other social media companies
and the content found thereon (to the extent that such accounts and content are transferable pursuant to the terms, conditions, and policies
of each applicable social media platform); (d) Copyrights; (e) Patents; and (f) business and technical information, databases, data collections
and other confidential and proprietary information and all rights therein.
4
“Intellectual Property
Security Agreement” means the Intellectual Property Security Agreement required to be delivered pursuant to Section 6(h)(i)
of this Agreement, substantially in the form attached hereto as Exhibit A.
“Licenses” means,
collectively, the Copyright Licenses, the Trademark Licenses and the Patent Licenses.
“Lien” means
any mortgage, lien, pledge, charge, security interest, adverse claim or other encumbrance upon or in any property or assets.
“Noteholders”
means, at any time, the holders of the Notes at such time.
“Notes”, “Initial
Notes”, “Second Notes” and “Additional Notes” shall have the respective meanings set forth
in the Securities Purchase Agreement.
“Obligations”
shall have the meaning set forth in Section 4 of this Agreement.
“Paid in Full”
or “Payment in Full” means the latest to occur of the following: (a) the indefeasible payment in full in cash of all
of the Obligations; (b) no principal amount in respect of any Notes issued by the Grantors pursuant to the Securities Purchase Agreement
remains outstanding (whether such Notes have been converted or exchanged in full or otherwise satisfied in accordance with the terms of
the Securities Purchase Agreement); and (c) the ability of the Grantors and the Buyers to conduct Additional Closings and the Grantors
to issue Additional Notes have been fully terminated or exhausted in accordance with the terms of the Securities Purchase Agreement.
“Patent Licenses”
means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensee or licensor and providing for
the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all Patent Licenses
set forth in Schedule II hereto).
“Patents” means
all domestic and foreign letters patent, design patents, utility patents, industrial designs, inventions, trade secrets, ideas, concepts,
methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and other general intangibles
of like nature, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent, design patents,
utility patents, industrial designs, inventions, trade secrets, ideas, concepts, methods, techniques, processes, proprietary information,
technology, know-how and formulae described in Schedule II hereto), all applications, registrations and recordings thereof (including,
without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office
or agency of the United States or any other country or any political subdivision thereof), and all reissues, reexaminations, divisions,
continuations, continuations in part and extensions or renewals thereof.
“Perfection Requirement”
or “Perfection Requirements” shall have the meaning set forth in Section 5(j) of this Agreement.
“Person” means
an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization,
joint venture or other enterprise or entity or Governmental Authority.
“Pledged Accounts”
means all of each Grantor’s right, title and interest in all of its Deposit Accounts, Commodity Accounts, Custodial Accounts and
Securities Accounts (in all cases, including, without limitation, all Controlled Accounts and Foreign Currency Control Accounts) and other
Custodial Accounts.
“Pledged Collateral”
shall have the meaning set forth in Section 2(a).
“Pledged Debt”
shall have the meaning set forth in Section 2(a).
“Pledged Entity”
means, each Person listed from time to time on Schedule IV hereto as a “Pledged Entity”, together with each other Person,
any right in or interest in or to all or a portion of whose Securities or Capital Stock is acquired or otherwise owned by a Grantor on
or after the date hereof.
5
“Pledged Equity”
means all of each Grantor’s right, title and interest in and to all of the Securities and Capital Stock now or hereafter owned by
such Grantor (including, without limitation, those interests listed opposite the name of such Grantor on Schedule IV), regardless
of class or designation, including all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto,
also including, without limitation, any certificates representing such Securities and/or Capital Stock, the right to receive any certificates
representing any of such Securities and/or Capital Stock, all warrants, options, subscription, share appreciation rights and other rights,
contractual or otherwise, in respect thereof, and the right to receive dividends, distributions of income, profits, surplus, or other
compensation by way of income or liquidating distributions, in cash or in kind, and cash, instruments, and other property from time to
time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange
for any or all of the foregoing.
“Pledged Operating Agreements”
means all of each Grantor’s rights, powers and remedies under the limited liability company operating agreements of each of the
Pledged Entities that is a limited liability company, as may be amended, modified, supplemented, extended, renewed, restated or replaced
from time to time.
“Pledged Partnership Agreements”
means all of each Grantor’s rights, powers, and remedies under the general or limited partnership agreements of each of the Pledged
Entities that is a general or limited partnership, as may be amended, modified, supplemented, extended, renewed, restated or replaced
from time to time.
“Pledged Securities”
means any Promissory Notes, stock certificates, limited liability membership interests or other Securities, certificates or Instruments
now or hereafter included in the Pledged Collateral, including all Pledged Equity, Pledged Debt and all other certificates, instruments
or other documents representing or evidencing any Pledged Collateral.
“Securities Purchase Agreement”
shall have the meaning set forth in the recitals hereto.
“Required Holders”
shall have the meaning set forth in Section 9(e) of the Securities Purchase Agreement.
“Subsidiary”
means any Person in which a Grantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity or similar
interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “Subsidiaries”.
“Trademark Licenses”
means all licenses, contracts or other agreements, whether written or oral, naming any Grantor as licensor or licensee and providing for
the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such licenses, contracts
or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by any Grantor
and now or hereafter covered by such licenses, contracts or agreements (including, without limitation, all Trademark Licenses described
in Schedule II hereto).
“Trademarks”
means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s,
assumed names, Internet domain names, trade styles, designs, logos and other source or business identifiers and all general intangibles
of like nature, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation, all domestic and foreign
trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a’s, assumed names, Internet
domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto), all applications,
registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent
and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political
subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such
marks and all customer lists, formulae and other Records of any Grantor relating to the distribution of products and services in connection
with which any of such marks are used.
“Transferable Record”
means a “transferable record” as defined in the Federal Electronic Signatures in Global and National Commerce Act, the New
York State Electronic Signatures and Records Act, the UETA of any applicable jurisdiction or any similar state law based on the UETA.
6
“UETA” means
the Uniform Electronic Transactions Act.
Section
2. Pledge of Pledged Collateral.
(a) As
collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, each Grantor hereby
assigns and pledges to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors
and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest
in, all of such Grantor’s right, title and interest in, to and under all of the following, wherever located and whether now or hereafter
existing and whether now owned or hereafter acquired: (i) the Pledged Equity; (ii) all Promissory Notes, Securities and Instruments evidencing
debt now owned or at any time hereafter acquired by it (including, without limitation, those listed opposite the name of such Grantor
on Schedule IV) (collectively, the “Pledged Debt”); (iii) subject to Section 2(g) and 2(h),
all payments of principal or interest, dividends, distributions, cash, Promissory Notes, Securities, Instruments and other property from
time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds
received in respect of, the Pledged Equity and the Pledged Debt; (iv) all rights and privileges of such Grantor with respect to the Securities
and other property referred to in clauses (i), (ii), and (iii) above; and (v) all Proceeds of, and Security Entitlements in respect of,
any of the foregoing (the items referred to in clauses (i) through (v) above being collectively referred to as the “Pledged Collateral”);
provided that the Pledged Collateral shall not include any item referred to in clauses (i) through (v) above if, for so long as and to
the extent such item constitutes Excluded Collateral.
(b) On
each Closing Date (in the case of any Grantor that grants a Lien on any of its assets hereunder on the Initial Closing Date), on the Second
Closing Date or each Additional Closing Date and the date on which it becomes a party to this Agreement pursuant to Section 6(m)
(in the case of any other Grantor), each Grantor shall deliver or cause to be delivered to the Collateral Agent any and all Pledged Securities
(other than any Uncertificated Securities, but only for so long as such Securities remain uncertificated) to the extent such Pledged Securities,
in the case of Promissory Notes and other Instruments evidencing debt, are required to be delivered pursuant to Section 2(c). Thereafter,
whenever such Grantor acquires any other Pledged Security (other than any Uncertificated Securities, but only for so long as such Uncertificated
Securities remain uncertificated), such Grantor shall promptly, and in any event within 30 days (or such longer period as the Collateral
Agent may agree to in writing), deliver or cause to be delivered to the Collateral Agent such Pledged Security as Collateral hereunder
to the extent such Pledged Securities, in the case of Promissory Notes and Instruments evidencing debt, are required to be delivered pursuant
to Section 2(c).
(c) Each
Grantor will cause all debt for borrowed money in an aggregate principal amount of $10,000 or more owed to such Grantor by any other Person
to be evidenced by a duly executed Promissory Note, and shall cause each such Promissory Note to be pledged and delivered to the Collateral
Agent, (i) on the Initial Closing Date, in the case of any such debt existing on the date hereof (or, in the case of any Grantor
that becomes a party hereto after the date hereof, on the date such Grantor becomes a party hereto, in the case of any such debt existing
on such date) or (ii) promptly following the incurrence thereof, in the case of any such debt incurred after the date hereof (or
such other date), in each case pursuant to the terms hereof.
(d) Upon
delivery to the Collateral Agent, (i) any Pledged Securities required to be delivered pursuant to Section 2(b) and/or 2(c)
shall be accompanied by undated stock or note powers duly executed by the applicable Grantor in blank or other instruments of transfer
reasonably satisfactory to the Collateral Agent and by such other instruments and documents as the Collateral Agent may reasonably request
in order to effect the transfer of such Pledged Securities and (ii) all other property comprising part of the Pledged Collateral required
to be delivered pursuant to Section 2(b) and/or 2(c) shall be accompanied by undated proper instruments of assignment duly
executed by the applicable Grantor and such other instruments or documents as the Collateral Agent may reasonably request in order to
effect transfer of such Pledged Collateral. Each delivery of Pledged Securities or other Pledged Collateral shall be accompanied by a
schedule describing such Pledged Securities or Pledged Collateral, as the case may be, which schedule shall be deemed to supplement Schedule
IV and be made a part hereof; provided that failure to attach any such schedule hereto shall not affect the validity of such
pledge of such Pledged Securities. Each schedule so delivered shall supplement any prior schedules so delivered.
7
(e) The
assignment, pledge, Lien and security interest granted in Section 2(a) are granted as security only and shall not subject the Collateral
Agent or any Noteholder to, or in any way alter or modify, any obligation or liability of any Grantor with respect to or arising out of
the Pledged Collateral.
(f) If
an Event of Default shall occur and be continuing and, other than in the case of an Event of Default caused by a Bankruptcy Event, the
Collateral Agent shall have notified the Borrower of its intent to exercise such rights, (a) the Collateral Agent, shall have the right
(in its sole and absolute discretion) to cause each of the Pledged Securities to be transferred of record into the name of the Collateral
Agent or into the name of its nominee (as pledgee or as sub-agent) or the name of the applicable Grantor, endorsed or assigned in blank
or in favor of the Collateral Agent and (b) to the extent permitted by the documentation governing such Pledged Securities and applicable
law, the Collateral Agent shall have the right to exchange the certificates representing Pledged Securities for certificates of smaller
or larger denominations for any purpose consistent with this Agreement. Each Grantor will promptly give to the Collateral Agent copies
of any material notices received by it with respect to Pledged Securities registered in the name of such Grantor. Each Grantor will take
any and all actions reasonably requested by the Collateral Agent to facilitate compliance with this Section 2(f).
(g) Unless
and until an Event of Default shall have occurred and be continuing and, other than in the case of an Event of Default caused by a Bankruptcy
Event, the Collateral Agent shall have notified the Grantors that the rights of the Grantors under this Section 2(g) are being
suspended:
(i) Each Grantor shall
be entitled to exercise any and all voting and/or other consensual rights and powers inuring to an owner of Pledged Collateral or any
part thereof for any purpose consistent with the terms of this Agreement and the other Transaction Documents.
(ii) The Collateral Agent
shall promptly execute and deliver to each Grantor, or cause to be executed and delivered to such Grantor, all such proxies, powers of
attorney and other instruments as such Grantor may reasonably request in writing for the purpose of enabling such Grantor to exercise
the voting and/or consensual rights and powers it is entitled to exercise pursuant to Section 2(g)(i), in each case as shall be
specified in such request.
(iii) Each Grantor shall
be entitled to receive and retain any and all dividends, interest, principal and other distributions paid on or distributed in respect
of the Pledged Collateral, to the extent (and only to the extent) that such dividends, interest, principal and other distributions are
permitted by, the other Transaction Documents and applicable laws; provided that any noncash dividends, interest, principal or
other distributions that would constitute Pledged Equity or Pledged Debt, whether resulting from a subdivision, combination or reclassification
of the outstanding equity interests of the issuer of any Pledged Securities or received in exchange for Pledged Securities or any part
thereof, or in redemption thereof, or as a result of any merger, consolidation, acquisition or other exchange of assets to which such
issuer may be a party or otherwise, shall be and become part of the Pledged Collateral, and, if received by any Grantor, shall be held
in trust for the benefit of the Collateral Agent and shall, to the extent required by Section 2(b) and/or 2(c) be forthwith
delivered to the Collateral Agent in the same form as so received (with any necessary endorsement or documents set forth in Section
2(d) or as otherwise reasonably requested by the Collateral Agent). So long as no Event of Default has occurred and is continuing,
the Collateral Agent shall promptly deliver to each Grantor any Pledged Securities in its possession if requested to be delivered to the
issuer thereof in connection with any exchange or redemption of such Pledged Securities.
(h) Upon
the occurrence and during the continuance of an Event of Default and, other than in the case of an Event of Default caused by a Bankruptcy
Event, after the Collateral Agent shall have notified the Grantors of the suspension of the rights of the Grantors under Section 2(g)(iii),
all rights of any Grantor to dividends, interest, principal or other distributions that such Grantor is authorized to receive pursuant
to Section 2(g)(iii) shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall have the
sole and exclusive right and authority to receive and retain such dividends, interest, principal or other distributions as part of the
Pledged Collateral, subject to Section 2(k) and the last sentence of this Section 2(h). All dividends, interest,
8
principal
or other distributions received by any Grantor contrary to the provisions of Section 2(g) or this Section 2(h) shall be
held in trust for the benefit of the Collateral Agent and shall be forthwith delivered to the Collateral Agent upon demand in the same
form as so received (with any necessary endorsement reasonably requested by the Collateral Agent). Any and all money and other property
paid over to or received by the Collateral Agent pursuant to the provisions of Section 2(g) and/or this Section 2(h) shall
be retained by the Collateral Agent in an account to be established by the Collateral Agent upon receipt of such money or other property,
shall be held as security for the payment and performance of the Obligations and shall be applied in accordance with the provisions of
Section 8. After all Events of Default have been waived, and the Grantors have delivered to the Collateral Agent a certificate
of an executive officer to such effect, the Collateral Agent shall promptly repay to each Grantor (without interest) all dividends, interest,
principal or other distributions that such Grantor would otherwise be permitted to retain pursuant to the terms of Section 2(g)(iii)
in the absence of an Event of Default and that remain in such account.
(i) Upon
the occurrence and during the continuance of an Event of Default and, other than in the case of an Event of Default caused by a Bankruptcy
Event, after the Collateral Agent shall have notified the Grantors of the suspension of the rights of the Grantors under Section 2(g)(i),
all rights of any Grantor to exercise the voting and consensual rights and powers it is entitled to exercise pursuant to Section 2(g)(i),
and the obligations of the Collateral Agent under Section 2(g)(ii), shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall have the sole and exclusive right and authority to exercise such voting and consensual rights and
powers subject to Section 2(k) and the last sentence of this Section 2(i); provided that, the Collateral Agent shall
have the right from time to time following and during the continuance of an Event of Default to permit the Grantors to exercise such rights.
After all Events of Default have been waived, and the Grantors have delivered to the Collateral Agent a certificate of an executive officer
to such effect, each Grantor shall have the exclusive right to exercise the voting and/or consensual rights and powers that such Grantor
would otherwise be entitled to exercise pursuant to the terms of Section 2(g)(i), and the obligations of the Collateral Agent under
Section 2(g)(ii) shall be reinstated.
(j) Any
notice given by the Collateral Agent to the Grantors under Section 2(f), Section 2(g), Section 2(h) or Section
2(i): (i) may be given by telephone if promptly confirmed in writing; (ii) may be given with respect to one or more of the Grantors
at the same or different times; and (iii) may suspend the rights of the Grantors under Section 2(g)(i) or 2(g)(iii) in part
without suspending all such rights (as specified by the Collateral Agent in its sole and absolute discretion) and without waiving or otherwise
affecting the Collateral Agent’s rights to give additional notices from time to time suspending other rights so long as an Event
of Default has occurred and is continuing.
(k) Nothing
contained in this Agreement shall be construed to make the Collateral Agent or any Buyer liable as a member of any company or limited
liability company or as a partner of any partnership, and neither the Collateral Agent nor any Buyer by virtue of this Agreement or otherwise
(except as referred to in the following sentence) shall have any of the duties, obligations or liabilities of a member of any limited
liability company or as a partner in any partnership. The parties hereto expressly agree that, unless the Collateral Agent shall become
the absolute owner of Pledged Equity consisting of a limited liability company interest or a partnership interest pursuant hereto, this
Agreement shall not be construed as creating a partnership or joint venture among the Collateral Agent, any Buyer, any Grantor and/or
any other Person.
Section
3. Grant of Security Interest.
(a) As
collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, each Grantor hereby
pledges and assigns to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors
and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest
in, all of such Grantor’s right, title and interest in, to and under all personal property and assets of such Grantor, wherever
located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind, nature and description, whether
tangible or intangible (together with the Pledged Collateral, the “Collateral”), including, without limitation,
the following:
9
(i) all
Accounts (whether tangible or electronic);
(ii) all
Chattel Paper (whether tangible or Electronic Chattel Paper);
(iii) all
Commercial Tort Claims, including, without limitation, those specified on Schedule VI hereto;
(iv) all
Documents (including, if applicable, electronic Documents);
(v) all
Equipment;
(vi) all
Fixtures;
(vii) all
General Intangibles (including, without limitation, all Payment Intangibles (whether tangible or electronic));
(viii) all
Goods;
(ix) all
Instruments;
(x) all
Inventory;
(xi) all
Investment Property (and, regardless of whether classified as Investment Property under the Code, all Pledged Equity, Pledged Operating
Agreements and Pledged Partnership Agreements);
(xii) all
Intellectual Property and all Licenses;
(xiii) all
Letter-of-Credit Rights;
(xiv) all
Pledged Accounts, all cash and other property from time to time deposited therein, and all monies (whether tangible or electronic) and
property in the possession or under the control of the Collateral Agent or any Noteholder or any Affiliate, representative, agent or correspondent
of the Collateral Agent or any such Noteholder;
(xv) all
Supporting Obligations;
(xvi) All
controllable accounts, controllable electronic records, controllable payment intangibles, Electronic Chattel Paper, Electronic Documents,
Electronic Money, Transferable Records and other Article 12 Collateral;
(xvii) all
other tangible and intangible personal property of each Grantor (whether or not subject to the Code), including, without limitation,
all Deposit Accounts and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents,
profits, income, benefits, substitutions and replacements of and to any of the property of any Grantor described in the preceding clauses
of this Section 3(a) (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties
now or hereafter held by each Grantor in respect of any of the items listed above), and all books, correspondence, files and other Records,
including, without limitation, all tapes, desks, cards, Software, data and computer programs in the possession or under the control of
any Grantor or any other Person from time to time acting for any Grantor, in each case, to the extent of such Grantor’s rights therein,
that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section
3(a) or are otherwise necessary or helpful in the collection or realization thereof; and
(xviii) all
Proceeds, including all Cash Proceeds and Noncash Proceeds, and products of any and all of the foregoing Collateral; in each case
howsoever any Grantor’s interest therein may arise or appear (whether by ownership, security interest, claim or
otherwise).
10
(b) Notwithstanding
anything herein to the contrary, the term “Collateral” shall not include any Excluded Collateral.
(c) Each
Grantor agrees not to further encumber, or permit any other Lien to exist that encumbers, any of its Intellectual Property, including,
without limitation, any of its Copyrights, Copyright applications, Copyright registrations and like protections in each work of authorship
and derivative work, whether published or unpublished, Licenses, Patents, Patent applications and like protections, including, without
limitation, improvements, divisions, continuations, renewals, reissues, extensions, and continuations-in-part of the same, Trademarks,
service marks and, to the extent permitted under applicable law, any applications therefor, whether registered or not, and the goodwill
of the business of such Grantor connected with and symbolized thereby, know-how, operating manuals, trade secret rights, rights to unpatented
inventions, and any claims for damage by way of any past, present, or future infringement of any of the foregoing, in each case without
the Collateral Agent’s prior written consent (which consent may be withheld or given in the Collateral Agent’s sole and absolute
discretion).
(d) Each
Grantor agrees that the pledge of the shares of Capital Stock acquired by such Grantor of any and all Persons now or hereafter existing
that is a Foreign Subsidiary may be supplemented by one or more separate pledge agreements, deeds of pledge, share charges or other similar
agreements or instruments, executed and delivered by such Grantor in favor of the Collateral Agent, which agreements or instruments will
provide for the pledge of such shares of Capital Stock and perfection of the Lien on such shares in accordance with the laws of the applicable
foreign jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent may, at any time and from time to time, in its
sole and absolute discretion, take such actions in such foreign jurisdictions that will result in the perfection of the Lien created in
such shares of Capital Stock.
(e) In
addition, to secure the due and punctual payment and performance in full of the Obligations, as and when due, and in order to induce the
Buyers as aforesaid, each Grantor hereby grants to the Collateral Agent, its successors and permitted assigns, for the ratable benefit
of the Collateral Agent and the Noteholders, a right of set-off against the property of such Grantor held by the Collateral Agent, for
itself and for the ratable benefit of the Noteholders, consisting of property described above in Section 2(a) and/or Section
3(a) now or hereafter in the possession or custody of or in transit to the Collateral Agent, for any purpose, including safekeeping,
collection or pledge, for the account of such Grantor, or as to which such Grantor may have any right or power; provided that such right
shall only to be exercised after an Event of Default has occurred and is continuing.
Security for Obligations.
The Lien and security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations,
whether direct or indirect, absolute or contingent, and whether now existing or hereafter incurred (collectively, the “Obligations”):
(a) (i)
the payment by the Company and each other Grantor, as and when due and payable (by scheduled maturity, required prepayment, acceleration,
demand or otherwise), of all amounts from time to time owing by it in respect of the Securities Purchase Agreement, this Agreement, the
Notes and the other Transaction Documents, and (ii) in the case of the Guarantors, the payment by each Guarantor of its obligations under
the Guaranty when due and payable, including, without limitation, payment by each Guarantor, as and when due and payable of all Guaranteed
Obligations under the Guaranties, including, without limitation, in both cases, (A) all principal of, interest, make-whole and other amounts
on the Notes (including, without limitation, all interest, make-whole and other amounts that accrues after the commencement of any Insolvency
Proceeding of any Grantor, whether or not the payment of such interest is enforceable or is allowable in such Insolvency Proceeding),
and (B) all fees, interest, premiums, penalties, contract causes of action, costs, commissions, expense reimbursements, indemnifications
and all other amounts due or to become due under this Agreement or any of the Transaction Documents; and
(b) the
due and punctual performance and observance by the Company and each Grantor of all of its other obligations from time to time existing
in respect of any of the Transaction Documents, including without limitation, with respect to any conversion, exchange or redemption rights
of the Noteholders under the Notes.
11
Representations and Warranties.
Each Grantor represents and warrants as follows:
(a) Schedule
I hereto sets forth (i) the exact legal name of each Grantor, and (ii) the state or country of incorporation, organization or formation
and the organizational identification number of each Grantor in such state or country. The information set forth in Schedule I
hereto with respect to such Grantor is true and accurate in all respects. Such Grantor has not previously changed its name (or operated
under any other name), jurisdiction of incorporation or organization or organizational identification number from those set forth in Schedule
I hereto except as disclosed in Schedule I hereto.
(b) There
is no pending or, to its knowledge, written notice threatening any action, suit, proceeding or claim affecting any Grantor before any
Governmental Authority or any arbitrator, or any order, judgment or award issued by any Governmental Authority or arbitrator, in each
case, that may adversely affect the grant by any Grantor, or the perfection, of the Lien and security interest purported to be created
hereby in the Collateral, or the exercise by the Collateral Agent of any of its rights or remedies hereunder.
(c) All
Federal, state and local tax returns and other reports required by applicable law to be filed by any Grantor have been filed, or extensions
have been obtained, and all taxes, assessments and other governmental charges or levies imposed upon any Grantor or any property of any
Grantor (including, without limitation, all federal income and social security taxes on employees’ wages) and which have become
due and payable on or prior to the date hereof have been paid, except to the extent contested in good faith by proper proceedings which
stay the imposition of any penalty, fine or Lien resulting from the non-payment thereof and with respect to which adequate reserves have
been set aside for the payment thereof in accordance with GAAP.
(d) All
Equipment, Fixtures, Goods and Inventory of each Grantor now existing are, and all Equipment, Fixtures, Goods and Inventory of each Grantor
hereafter existing will be, located and/or based at the addresses specified therefor in Schedule III hereto, except that each Grantor
will give the Collateral Agent written notice of any change in the location of any such Collateral within 20 days of such change, other
than to locations set forth on Schedule III hereto (and with respect to which the Collateral Agent has filed financing statements
and otherwise fully perfected its Liens thereon). Each Grantor’s principal place of business and chief executive office, the place
where each Grantor keeps its Records concerning the Collateral and all originals of all Chattel Paper in which any Grantor has any right,
title or interest are located and will continue to be located at the addresses specified therefor in Schedule III hereto.
None of the Accounts in which any Grantor has any right, title or interest is or will be evidenced by Promissory Notes or other Instruments.
(e) Set
forth in Schedule IV hereto is a complete and accurate list, as of the Initial Closing Date, of (i) all Pledged Debt, specifying
the debtor thereof and the outstanding principal amount thereof as of the Initial Closing Date, Securities and other Instruments in which
any Grantor has any right, title or interest, (ii) each Pledged Account of each Grantor, together with the name and address of each
institution at which each such Pledged Account is maintained, the account number for each such Pledged Account and a description of the
purpose of each such Pledged Account (including, without limitation, all Custodial Accounts and Article 12 Collateral of each Grantor,
together with the name of each institution (if any) and the address at which such Custodial Account and Article 12 Collateral is maintained,
the Custodial Account number and a description of the purpose of each such Custodial Account), (iii) the name of each Foreign Currency
Controlled Account of each Grantor, together with the name and address of each institution at which each such Foreign Currency Controlled
Account is maintained and the amount of cash or cash equivalents held in each such Foreign Currency Controlled Account. Set forth in Schedule
I hereto is a complete and correct list of each trade name used by each Grantor and the name of, and each trade name used by, each
Person from which each Grantor has acquired any substantial part of the Collateral. All of the Pledged Debt, to the best of the Grantors’
knowledge (provided that no such knowledge qualification applies to Pledged Debt issued by a Grantor or a Subsidiary), is the legal, valid
and binding obligation of the issuer thereof, enforceable against such issuer in accordance with its terms.
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(f) Each
Grantor has delivered to the Collateral Agent complete and correct copies of each License described in Schedule II hereto, including
all schedules and exhibits thereto, which represent all of the Licenses of the Grantors existing on the date of this Agreement. Each such
License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are
no other agreements, arrangements or understandings, written or oral, relating to the matters covered thereby or the rights of such Grantor
or any of its Affiliates in respect thereof. Each material License now existing is, and any material License entered into in the future
will be, the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms.
No default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder
in favor of any such party.
(g) Each
Grantor owns and controls, or otherwise possesses adequate rights to use, all of its Intellectual Property, which is the only Intellectual
Property necessary to conduct its business in substantially the same manner as conducted as of the date hereof. Schedule II hereto
sets forth a true and complete list of all Intellectual Property and Licenses owned or used by each Grantor as of the date hereof, and
applications for grant or registration of Intellectual Property. To the knowledge of each Grantor, all such Intellectual Property of such
Grantor is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable and has not
been abandoned in whole or in part. Except as set forth in Schedule II, no such Intellectual Property is the subject of any
licensing or franchising agreement. Except as set forth in Schedule II, no Grantor has any knowledge of any infringement upon or
conflict with the Patent, Trademark, Copyright, trade secret rights of others and, each Grantor is not now infringing or in conflict with
any Patent, Trademark, Copyright, trade secret or similar rights of others, and to the knowledge of each Grantor, no other Person is now
infringing or in conflict in any material respect with any such properties, assets and rights owned or used by each Grantor. No Grantor
has received any notice that it is violating or has violated the Trademarks, Patents, Copyrights, inventions, trade secrets, proprietary
information and technology, know-how, formulae, rights of publicity or other intellectual property rights of any third party.
(h) Each
Grantor is and will be at all times the sole and exclusive owner of the Collateral in which such Grantor has granted a Lien and security
interest hereunder free and clear of any Liens except for Permitted Liens and the Liens existing on the date hereof as set forth on Schedule
3(h). No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file
in any recording or filing office except such as (i) may have been filed in favor of the Collateral Agent and/or the Noteholders relating
to this Agreement or the other Transaction Documents or (ii) are intended to perfect any anticipated Permitted Liens on the Collateral
or any other Liens existing on the date hereof, the plans of which (or, in the case of existing Liens, the particulars of which) are set
forth on Schedule 3(h).
(i) The
exercise by the Collateral Agent of any of its rights and remedies hereunder will not contravene any law or any contractual restriction
binding on or otherwise affecting any Grantor or any of its properties and will not result in or require the creation of any Lien, upon
or with respect to any of its properties other than as granted pursuant to this Agreement.
(j) No
authorization or approval or other action by, and no notice to or filing with, any Governmental Authority, is required for (i) the
grant by each Grantor, or the perfection, of the Lien and security interest purported to be created hereby in the Collateral, or (ii) the
exercise by the Collateral Agent of any of its rights and remedies hereunder, except for (A) the filing under the Code as in effect
in the applicable jurisdiction of the financing statements described in Schedule V hereto, all of which financing statements have
been duly filed and are in full force and effect, (B) with respect to all Pledged Accounts containing Article 12 Collateral, and all Article
12 Collateral and other property from time to time deposited therein, the execution of a Custodian Control Agreement with the Custodian
with which the applicable Pledged Accounts are maintained, (C) with respect to Commodity Contracts, the execution of a Control Agreement
with the commodity intermediary with which such Commodity Contract is carried, (D) with respect to the perfection of the security interest
created hereby in the United States Intellectual Property and Licenses, the recording of the appropriate Intellectual Property Security
Agreement in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (E) with respect to the
perfection of the security interest created hereby in foreign Intellectual Property and Licenses, registrations and filings in jurisdictions
located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses,
(F) with respect to the perfection of the security interest created hereby in any Letter-of-Credit Rights,
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the consent of the issuer of
the applicable letter of credit to the assignment of proceeds as provided in the Code as in effect in the applicable jurisdiction, (G)
with respect to Investment Property constituting uncertificated securities, the applicable Grantor causing the issuer thereof either (i)
to register the Collateral Agent as the registered owner of such securities or (ii) to agree in an authenticated record with such Grantor
and the Collateral Agent that such issuer will comply with instructions with respect to such securities originated by the Collateral Agent
without further consent of such Grantor, such authenticated record to be in form and substance satisfactory to the Collateral Agent, (H)
with respect to Investment Property constituting certificated securities or instruments, such items to be delivered to and held by or
on behalf of the Collateral Agent pursuant hereto in suitable form for transfer by delivery or accompanied by duly executed instruments
of transfer or assignment in blank, all in form and substance satisfactory to the Collateral Agent, (I) with respect to any action that
may be necessary to obtain Control of Collateral constituting Commodity Contracts, Electronic Chattel Paper or Letter of Credit Rights,
the taking of such actions, and (J) the Collateral Agent having possession of all Documents, Chattel Paper, Instruments and cash constituting
Collateral (subclauses (A) through (J) each a “Perfection Requirement” and collectively, the “Perfection Requirements”).
(k) This
Agreement creates in favor of the Collateral Agent a legal, valid and enforceable Lien on and security interest in the Collateral, as
security for the Obligations. The performance of the Perfection Requirements results in (or shall result in) the perfection of such Lien
on and security interest in the Collateral. Such Lien and security interest is (or in the case of Collateral in which any Grantor obtains
any right, title or interest after the date hereof, will be), subject only to Permitted Liens and the Perfection Requirements, a first
priority, valid, enforceable and perfected Lien on and security interest in all personal property of each Grantor (other than Excluded
Collateral). Such recordings and filings and all other action necessary to perfect and protect such Lien and security interest have been
duly taken (and, in the case of Collateral in which any Grantor obtains right, title or interest after the date hereof, will be duly taken),
except for the Collateral Agent’s having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral
after the date hereof and the other actions, filings and recordations described above, including the Perfection Requirements.
(l) As
of the date hereof, no Grantor holds any Commercial Tort Claims or has knowledge of any pending Commercial Tort Claims, except for the
Commercial Tort Claims described in Schedule VI.
(m) All
of the Pledged Equity is presently owned by the applicable Grantor as set forth in Schedule IV free and clear of all Liens, except
for Permitted Liens, and is presently represented by the certificates listed on Schedule IV hereto (if applicable). As of the date
hereof, there are no existing options, warrants, calls or commitments of any character whatsoever relating to the Pledged Equity other
than as contemplated and permitted by the Transaction Documents. Each Grantor is the sole holder of record and the sole beneficial owner
of the Pledged Equity, as applicable. None of the Pledged Equity has been issued or transferred in violation of the securities registration,
securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject. The Pledged Equity constitutes
100% or such other percentage as set forth on Schedule IV of the issued and outstanding shares of Capital Stock of the applicable
Pledged Entity. All of the Pledged Equity has been duly and validly authorized and issued by the issuer thereof and in the case of Pledged
Equity (other than Pledged Equity consisting of limited liability company interests or partnership interests which, pursuant to the relevant
organizational or formation documents, cannot be fully paid and non-assessable), is fully paid and non-assessable.
(n) Such
Grantor (i) is a company, corporation, limited liability company or limited partnership, as applicable, duly organized or incorporated,
validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, (ii) has all
requisite corporate, limited liability company or limited partnership power and authority to conduct its business as now conducted and
as presently contemplated and to execute and deliver this Agreement and each other Transaction Document to which such Grantor is a party,
and to consummate the transactions contemplated hereby and thereby and (iii) is duly qualified to do business and is in good standing
in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes
such qualification necessary, except where the failure to be so qualified would not result in a Material Adverse Effect.
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(o) The
execution, delivery and performance by each Grantor of this Agreement and each other Transaction Document to which such Grantor is a party
(i) have been duly authorized by all necessary corporate, limited liability company or limited partnership action, (ii) do not and will
not contravene its memorandum of association or articles of association, charter or by-laws, limited liability company or operating agreement,
certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding on such
Grantor or its properties, (iii) do not and will not result in or require the creation of any Lien (other than pursuant to any Transaction
Document) upon or with respect to any of its assets or properties, and (iv) do not and will not result in any default, noncompliance,
suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization or approval applicable to
it or its operations or any of its assets or properties.
(p) This
Agreement has been duly executed and delivered by each Grantor and is the legal, valid and binding obligation of such Grantor, enforceable
against such Grantor in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, suretyship or other similar laws and equitable principles (regardless of whether enforcement is sought in equity
or at law). Each of the other Transaction Documents to which any Grantor is or will be a party, when delivered, duly executed and delivered
by such Grantor and the legal, valid and binding obligation of such Grantor, enforceable against such Grantor in accordance with its terms,
except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, suretyship or other
similar laws and equitable principles (regardless of whether enforcement is sought in equity or at law).
(q) There
are no conditions precedent to the effectiveness of this Agreement that have not been satisfied or waived.
Covenants as to the Collateral.
Until all of the Obligations shall have been fully performed and Paid in Full, unless the Collateral Agent shall otherwise consent in
writing (in its sole and absolute discretion):
Further Assurances.
Each Grantor will, at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents
and take all further action that the Collateral Agent may reasonably request in order to: (i) perfect and protect the Lien and security
interest of the Collateral Agent created hereby; (ii) enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder in respect of the Collateral, including, without limitation, the Controlled Accounts; or (iii) otherwise effect the purposes
of this Agreement, including, without limitation: (A) marking conspicuously all Chattel Paper and each License and, at the request
of the Collateral Agent, each of its Records pertaining to the Collateral with a legend, in form and substance satisfactory to the Collateral
Agent, indicating that such Chattel Paper, License or Collateral is subject to the Lien and security interest created hereby, (B) delivering
and pledging to the Collateral Agent each Promissory Note, Security (subject to the limitations set forth in Section 3), Chattel
Paper or other Instrument, now or hereafter owned by any Grantor, duly endorsed and accompanied by executed instruments of transfer or
assignment, all in form and substance satisfactory to the Collateral Agent, (C) executing and filing (to the extent, if any, that
any Grantor’s signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments
thereto, as may be necessary or that the Collateral Agent may reasonably request in order to perfect and preserve the security interest
created hereby, (D) furnishing to the Collateral Agent from time to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral in each case as the Collateral Agent may reasonably request, all
in reasonable detail, (E) if any Collateral shall be in the possession of a third party, notifying such Person of the Collateral
Agent’s security interest created hereby and obtaining a written acknowledgment from such Person, in form and substance satisfactory
to the Collateral Agent, that such Person holds possession of the Collateral for the benefit of the Collateral Agent (for the ratable
benefit of the Collateral Agent and the Noteholders), (F) if at any time after the date hereof, any Grantor acquires or holds any
Commercial Tort Claim, promptly notifying the Collateral Agent in a writing signed by such Grantor setting forth a brief description of
such Commercial Tort Claim and granting to the Collateral Agent a Lien and security interest therein and in the Proceeds thereof, which
writing shall incorporate the provisions hereof and shall be in form and substance satisfactory to the Collateral Agent, (G) upon
the acquisition after the date hereof by any Grantor of any Titled Equipment (as defined below) subject to a certificate of title or ownership
(other than Titled Equipment that is subject to a purchase money security interest), causing the Collateral Agent to be listed as the
lienholder on such certificate of title or ownership and delivering evidence of the same to the Collateral Agent in accordance with Section
6(j) hereof; and (H) taking all actions required by the Code or by other applicable law, as applicable, in any relevant Code
jurisdiction, or by other applicable law as applicable in any foreign jurisdiction.
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(b) Location
of Collateral. Each Grantor will keep the Collateral (i) at the locations specified therefor on Schedule III hereto, or (ii)
at such other locations set forth on Schedule III and with respect to which the Collateral Agent has filed financing statements
and otherwise fully perfected its Liens thereon, or (iii) at such other locations in the United States, provided that thirty (30) days
prior to any change in the location of any Collateral to such other location, or upon the acquisition of any Collateral to be kept at
such other locations, the Grantors shall give the Collateral Agent written notice thereof and deliver to the Collateral Agent a new Schedule
III indicating such new locations and such other written statements and schedules as the Collateral Agent may require.
Condition of Equipment.
Each Grantor will maintain or cause to be maintained and preserved in good condition, repair and working order, ordinary wear and tear
excepted, the Equipment (necessary or useful to its business) and will forthwith, or in the case of any loss or damage to any Equipment
of any Grantor within a commercially reasonable time after the occurrence thereof, make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or desirable, consistent with past practice, or which the Collateral
Agent may request to such end. Any Grantor will promptly furnish to the Collateral Agent a statement describing in reasonable detail any
such loss or damage in excess of $25,000 per occurrence to any Equipment.
Taxes, Etc.
Each Grantor agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon,
and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent the validity
thereof is being contested in good faith by proper proceedings which stay the imposition of any penalty, fine or Lien resulting from the
non-payment thereof and with respect to which adequate reserves in accordance with GAAP have been set aside for the payment thereof.
Insurance. Each
Grantor will, at its own expense, maintain insurance (including, without limitation, comprehensive general liability, hazard, rent and
business interruption insurance) with respect to (A) its Article 12 Collateral and other digital assets (or cause the applicable Custodian
to maintain customary insurance, if applicable) against customary risks applicable to such Collateral, such as accidental or intentional
loss or destruction of private keys associated with its Article 12 Collateral, (B) its properties (including all real properties leased
or owned by it) and (C) its business, in each case, in such amounts and covering such risks, in such form and with responsible and reputable
insurance companies or associations as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried
generally in accordance with sound business practice by companies in similar businesses similarly situated and in any event, in amount,
adequacy and scope reasonably satisfactory to the Collateral Agent.
(i) To
the extent requested by the Collateral Agent at any time and from time to time, each such policy for liability insurance shall provide
for all losses to be paid on behalf of the Collateral Agent and any Grantor as their respective interests may appear, and each policy
for property damage insurance shall provide for all losses to be adjusted with, and paid directly to, the Collateral Agent. In addition
to and without limiting the foregoing, to the extent requested by the Collateral Agent at any time and from time to time, each such policy
shall in addition (A) name the Collateral Agent as an additional insured party and/or loss payee, as applicable, thereunder (without any
representation or warranty by or obligation upon the Collateral Agent) as its interests may appear, (B) contain an agreement by the insurer
that any loss thereunder shall be payable to the Collateral Agent on its own account notwithstanding any action, inaction or breach of
representation or warranty by any Grantor, (C) provide that there shall be no recourse against the Collateral Agent for payment of premiums
or other amounts with respect thereto, and (D) provide that at least 30 days’ prior written notice of cancellation, lapse, expiration
or other adverse change shall be given to the Collateral Agent by the insurer. Any Grantor will, if so requested by the Collateral Agent,
deliver to the Collateral Agent original or duplicate policies of such insurance (including certificates demonstrating compliance with
this Section 6(e)) and, as often as the Collateral Agent may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Any Grantor will also, at the request of the Collateral Agent, execute and deliver instruments of assignment
of such insurance policies and cause the respective insurers to acknowledge notice of such assignment.
(ii) Reimbursement
under any liability insurance maintained by any Grantor pursuant to this Section 6(e) may be paid directly to the Person who shall
have incurred liability covered by such insurance. In the case of any loss involving damage to Equipment or Inventory, to the extent paragraph
(iv) of this Section 6(e) is not applicable, any proceeds of insurance involving such damage shall be paid to the Collateral Agent,
and any Grantor will make or cause to be made the necessary repairs to or replacements of such Equipment or Inventory, and any proceeds
of insurance maintained by any Grantor pursuant to this Section 6(e) (except as otherwise provided in paragraph (iv) in this Section
6(e)) shall be paid by the Collateral Agent to any Grantor as reimbursement for the reasonable costs of such repairs or replacements.
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(iii) Notwithstanding
anything to the contrary in subsection 6(e)(iii) above, following and during the continuance of an Event of Default, all insurance payments
in respect of each Grantor’s properties and business shall be paid to the Collateral Agent and applied as specified in Section
8(b) hereof.
(f) Provisions
Concerning Name, Organization, Location, Accounts and Licenses.
(i) Each
Grantor will (A) give the Collateral Agent at least thirty (30) days’ prior written notice of any change in such Grantor’s
name, identity or organizational structure, (B) maintain its jurisdiction of incorporation, organization or formation as set forth in
Schedule I hereto, (C) immediately notify the Collateral Agent upon obtaining an organizational identification number, if on the
date hereof such Grantor did not have such identification number, and (D) keep adequate records concerning the Collateral and permit representatives
of the Collateral Agent during normal business hours on reasonable notice to such Grantor, to inspect and make abstracts from such records.
(ii) Each
Grantor will (except as otherwise provided in this subsection (f)), continue to collect, at its own expense, all amounts due or to
become due under the Accounts. In connection with such collections, any Grantor may (and, at the Collateral Agent’s direction, will)
take such action as any Grantor or the Collateral Agent may deem necessary or advisable to enforce collection or performance of the Accounts;
provided, however, that the Collateral Agent shall have the right at any time following the occurrence and during the continuance
of an Event of Default to notify the Account Debtors or obligors under any Accounts of the assignment of such Accounts to the Collateral
Agent and to direct such Account Debtors or obligors to make payment of all amounts due or to become due to any Grantor thereunder directly
to the Collateral Agent or its designated agent and, upon such notification and at the expense of any Grantor and to the extent permitted
by applicable law, to enforce collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the
same manner and to the same extent as any Grantor might have done. After receipt by any Grantor of a notice from the Collateral Agent
that the Collateral Agent has notified, intends to notify, or has enforced or intends to enforce any Grantor’s rights against the
Account Debtors or obligors under any Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts
and proceeds (including, without limitation, Instruments) received by any Grantor in respect of the Accounts shall be received in trust
for the benefit of the Collateral Agent hereunder (for the ratable benefit of the Collateral Agent and the Noteholders), shall be segregated
from other funds of any Grantor and shall be forthwith paid over to the Collateral Agent in the same form as so received (with any necessary
endorsement) to be applied as specified in Section 8(b) hereof, and (B) no Grantor will adjust, settle or compromise the amount
or payment of any Account or release wholly or partly any Account Debtor or obligor thereof or allow any credit or discount thereon. In
addition, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may (in its sole and absolute discretion)
direct any or all of the banks and financial institutions with which any Grantor either maintains a Deposit Account or a lockbox (including,
without limitation, any Controlled Account) or deposits the proceeds of any Accounts to send immediately to the Collateral Agent by wire
transfer (to such deposit account as the Collateral Agent shall specify, or in such other manner as the Collateral Agent shall direct)
all or a portion of such Securities, cash, investments and other items held by such institution. Any such Securities, cash, investments
and other items so received by the Collateral Agent shall be applied as specified in accordance with Section 8(b) hereof.
(iii) Upon
the occurrence and during the continuance of any breach or default under any material License referred to in Schedule II hereto
by any party thereto other than any Grantor, each Grantor party thereto will, promptly after obtaining knowledge thereof, give the Collateral
Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect
thereto and thereafter will take reasonable steps to protect and preserve its rights and remedies in respect of such breach or default,
or will obtain or acquire an appropriate substitute License.
(iv) Each
Grantor will, at its expense, promptly deliver to the Collateral Agent a copy of each notice or other communication received by it by
which any other party to any material License referred to in Schedule II hereto purports to exercise any of its rights or affect
any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.
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(v) Each
Grantor will exercise promptly and diligently each and every right which it may have under each material License (other than any right
of termination) and will duly perform and observe in all respects all of its obligations under each material License and will take all
action necessary or reasonable to maintain such Licenses in full force and effect. No Grantor will, without the prior written consent
of the Collateral Agent (in its sole and absolute discretion), cancel, terminate, amend or otherwise modify in any respect, or waive any
provision of, any material License referred to in Schedule II hereto.
(g) Transfers
and Other Liens.
(i) Except
as otherwise expressly permitted herein or in any other Transaction Documents, no Grantor shall, directly or indirectly, sell, lease,
license, assign, transfer, spin-off, split-off, close, convey or otherwise dispose of any Collateral whether in a single transaction or
a series of related transactions, other than (A) sales, leases, licenses, assignments, transfers, conveyances and other dispositions of
such assets or rights by such Grantor for fair value in the ordinary course of business consistent with past practices and (B) sales of
inventory and product in the ordinary course of business.
(ii) Except
as permitted under Section 15(e) of the Notes, no Grantor shall, directly or indirectly, redeem, repurchase or declare or pay any cash
dividend or distribution on any of its Capital Stock.
(iii) No
Grantor shall, directly or indirectly, without the prior written consent of the Required Holders, (A) issue any Notes (other than as contemplated
by the Securities Purchase Agreement and the Notes) or (B) issue any other Securities that would cause a breach or default under the Notes.
(iv) No
Grantor shall enter into, renew, extend or be a party to, any transaction or series of related transactions (including, without limitation,
the purchase, sale, lease, transfer or exchange of property or assets of any kind or the rendering of services of any kind) with any Affiliate,
except in the ordinary course of business in a manner and to an extent consistent with past practice and necessary or desirable for the
prudent operation of its business, for fair consideration and on terms no less favorable to it than would be obtainable in a comparable
arm’s length transaction with a Person that is not an Affiliate thereof.
(v) No
Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral, except for Permitted Liens and the Liens
existing on the date hereof and set forth on Schedule 3(h).
(h) Intellectual
Property.
(i) If
applicable, each Grantor shall duly execute and deliver the applicable Intellectual Property Security Agreement. Each Grantor (either
itself or through licensees) will, and will cause each licensee thereof to, take all action necessary to maintain all of the Intellectual
Property in full force and effect, including, without limitation, using the proper statutory notices, numbers and markings (relating to
patent, trademark and copyright rights) and using the Trademarks on each applicable trademark class of goods in order to so maintain the
Trademarks in full force and free from any claim of abandonment for non-use, and each Grantor will not (nor permit any licensee thereof
to) do any act or knowingly omit to do any act whereby any Intellectual Property may become abandoned, cancelled or invalidated; provided,
however, that so long as no Event of Default has occurred and is continuing, no Grantor
shall have an obligation to use or to maintain any Intellectual Property (A) that relates solely to any product or work, that is
no longer necessary or material and has been, or is in the process of being, discontinued, abandoned or terminated in the ordinary course
of business and consistent with the exercise of reasonable business judgment, (B) that is being replaced with Intellectual Property substantially
similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such
Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such
replacement Intellectual Property is subject to the Lien created by this Agreement and does not have a material adverse effect on the
business of any Grantor or (C) that is substantially the same as other Intellectual Property that is in full force,
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so long the failure
to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property
and so long as such other Intellectual Property is subject to the Lien and security interest created by this Agreement and does not have
a material adverse effect on the business of any Grantor. Each Grantor will cause to be taken all necessary steps in any proceeding before
the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country
or political subdivision thereof to maintain each registration of the Intellectual Property and application for registration of Intellectual
Property (other than the Intellectual Property described in the proviso to the immediately preceding sentence), including, without limitation,
filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment
of maintenance fees, filing fees, taxes or other governmental charges or fees. If any Intellectual Property (other than Intellectual Property
described in the proviso to the second sentence of subsection (i) of this clause (h)) is infringed, misappropriated, diluted or otherwise
violated in any material respect by a third party, each Grantor shall (x) upon learning of such infringement, misappropriation, dilution
or other violation, promptly notify the Collateral Agent and (y) promptly sue for infringement, misappropriation, dilution or other violation,
seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution or other violation,
or take such other actions as such Grantor shall deem appropriate under the circumstances to protect such Intellectual Property. Each
Grantor shall furnish to the Collateral Agent from time to time upon its request statements and schedules further identifying and describing
the Intellectual Property and Licenses and such other reports in connection with the Intellectual Property and Licenses as the Collateral
Agent may reasonably request, all in reasonable detail and promptly upon request of the Collateral Agent, following receipt by the Collateral
Agent of any such statements, schedules or reports, each Grantor shall modify this Agreement by amending Schedule
II hereto, as the case may be, to include any Intellectual Property and License, as the case may be, which is or hereafter
becomes part of the Collateral under this Agreement and shall execute and authenticate such documents and do such acts as shall be necessary
or, in the reasonable judgment of the Collateral Agent, desirable to subject such Intellectual Property and Licenses to the Lien and security
interest created by this Agreement. Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of
an Event of Default, no Grantor may abandon, surrender or cancel or otherwise permit any Intellectual Property to become abandoned, surrendered,
cancelled or invalid without the prior written consent of the Collateral Agent (in its sole and absolute discretion), and if any Intellectual
Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, each Grantor will take
such reasonable action as the Collateral Agent shall deem appropriate under the circumstances to protect such Intellectual Property.
(ii) In
no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration
of any Patent, Trademark or Copyright or the United States Copyright Office or the United States Patent and Trademark Office, as applicable,
or in any similar office or agency of the United States or any country or any political subdivision thereof unless it gives the Collateral
Agent prior written notice thereof. Upon request of the Collateral Agent, any Grantor shall execute, authenticate and deliver any and
all assignments, agreements, instruments, documents and papers as the Collateral Agent may reasonably request to evidence the Collateral
Agent’s security interest hereunder in such Intellectual Property and the General Intangibles of any Grantor relating thereto or
represented thereby, and each Grantor hereby appoints the Collateral Agent its attorney-in-fact to execute and/or authenticate and file
all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed, and such power (being coupled
with an interest) shall be irrevocable until all Obligations are fully performed and Paid in Full.
(i) Pledged
Accounts. No Grantor shall create or maintain any Pledged Account without the prior written consent of the Collateral Agent (in its sole
and absolute discretion) and complying with the terms of this Agreement.
(j) Titled
Equipment.
(i) Upon
the Collateral Agent’s written request, each Grantor shall deliver to the Collateral Agent originals of the certificates of title
or ownership for each equipment with a value in excess of $10,000 owned by it (“Titled Equipment”), with the Collateral
Agent listed as lienholder, for the ratable benefit of the Collateral Agent and the Noteholders.
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(ii) Each
Grantor hereby appoints the Collateral Agent as its attorney-in-fact for the purpose of (A) executing on behalf of such Grantor title
or ownership applications for filing with appropriate Governmental Authorities to enable Titled Equipment now owned or hereafter acquired
by such Grantor to be retitled and the Collateral Agent listed as lienholder thereof, (B) filing such applications with such Governmental
Authorities, and (C) executing such other agreements, documents and instruments on behalf of, and taking such other action in the
name of, such Grantor as the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof (including, without limitation,
for the purpose of creating in favor of the Collateral Agent a perfected Lien on the Titled Equipment and exercising the rights and remedies
of the Collateral Agent hereunder). This appointment as attorney-in-fact is coupled with an interest and is irrevocable until all of the
Obligations are fully performed and Paid in Full.
(iii) Any
certificates of title or ownership delivered pursuant to the terms hereof shall be accompanied by accurate odometer statements for each
Titled Equipment covered thereby.
(iv) So
long as no Event of Default shall have occurred and be continuing, upon the request of any Grantor, the Collateral Agent shall execute
and deliver to any Grantor such instruments as such Grantor shall reasonably request to remove the notation of the Collateral Agent as
lienholder on any certificate of title for any Titled Equipment; provided, however, that any such instruments shall be delivered,
and the release effective, only upon receipt by the Collateral Agent of a certificate from any Grantor stating that such Titled Equipment
is to be sold or has suffered a casualty loss (with title thereto in such case passing to the casualty insurance company therefor in settlement
of the claim for such loss) and the amount that any Grantor will receive as sale proceeds or insurance proceeds. Any proceeds of such
sale or casualty loss shall be paid to the Collateral Agent hereunder immediately upon receipt, to be applied to the Obligations then
outstanding.
(k) Control.
Each Grantor hereby agrees to take any or all action that may be necessary or that the Collateral Agent may reasonably request in order
for the Collateral Agent to obtain Control with respect to the following Collateral: (i) Electronic Chattel Paper, (ii) Investment
Property, (iii) Letter-of-Credit Rights and (iv) Article 12 Collateral.
(l) Inspection
and Reporting. Each Grantor shall permit the Collateral Agent, or any agent or representatives thereof or such attorneys, accountant
or other professionals or other Persons as the Collateral Agent may designate (at Grantors’ sole cost and expense) (i) to examine
and make copies of and abstracts from any Grantor’s Records and books of account, (ii) to visit and inspect its properties, (iii) to
verify materials, leases, Instruments, Accounts, Inventory and other assets of any Grantor from time to time, and (iv) to conduct
audits, physical counts, appraisals, valuations and/or examinations at the locations of any Grantor. Each Grantor shall also permit the
Collateral Agent, or any agent or representatives thereof or such attorneys, accountants or other professionals or other Persons as the
Collateral Agent may designate to discuss such Grantor’s affairs, finances and accounts with any of its directors, officers, managerial
employees, attorneys, independent accountants or any of its other representatives. Without limiting the foregoing, the Collateral Agent
may, at any time, in the Collateral Agent’s own name, in the name of a nominee of the Collateral Agent, or in the name of any Grantor
communicate (by mail, telephone, facsimile or otherwise) with the Account Debtors of such Grantor, parties to contracts with such Grantor
and/or obligors in respect of Instruments or Pledged Debt of such Grantor to verify with such Persons, to the Collateral Agent’s
satisfaction, the existence, amount, terms of, and any other matter relating to, Accounts, Instruments, Pledged Debt, Chattel Paper, payment
intangibles and/or other receivables.
(m) Future
Subsidiaries. If any Grantor hereafter creates or acquires any Subsidiary, simultaneously with the creation or acquisition of such
Subsidiary, such Grantor shall (i) if such Subsidiary is a Domestic Subsidiary, cause such Subsidiary to become a party to this Agreement
as an additional “Grantor” hereunder, (ii) deliver to the Collateral Agent updated Schedules to this Agreement, as appropriate
(including, without limitation, an updated Schedule IV to reflect the grant by such Grantor of a Lien on and security interest
in all Pledged Debt and Pledged Equity now or hereafter owned by such Grantor), (iii) if such Subsidiary is a Domestic Subsidiary, cause
such Subsidiary to duly execute and deliver a guaranty of the Obligations in favor of the Collateral Agent in form and substance acceptable
to the Collateral Agent, (iv) deliver to the Collateral Agent the stock certificates representing all of the Capital Stock of such
Subsidiary, along with undated stock powers for each such certificates, executed in blank (or, if any such shares of Capital Stock are
uncertificated, confirmation and evidence reasonably satisfactory to the Collateral Agent that the security interest in such uncertificated
securities has been transferred to and perfected by the Collateral Agent, in accordance with Sections 8-313, 8-321 and 9-115 of the Code
or any other similar or local or foreign law that may be applicable), (v) if such Subsidiary is a Foreign Subsidiary,
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cause such Subsidiary
to take such actions as may be required by the Collateral Agent (including executing and delivering guaranties, security agreements and
other agreements or instruments required by the Collateral Agent) and (vi) duly execute and/or cause to be delivered to the Collateral
Agent, in form and substance acceptable to the Collateral Agent, such opinions of counsel and other documents as the Collateral Agent
shall request with respect thereto; provided, however, that no Grantor shall be required to pledge any Excluded Collateral. Each Grantor
hereby authorizes the Collateral Agent to attach such updated Schedules to this Agreement and agrees that all Pledged Equity and Pledged
Debt listed on any updated Schedule delivered to the Collateral Agent shall for all purposes hereunder be considered Collateral. The Grantors
agree that the pledge of the shares of Capital Stock acquired by a Grantor of any Foreign Subsidiary may be supplemented by one or more
separate pledge agreements, deeds of pledge, share charges, or other similar agreements or instruments, executed and delivered by the
relevant Grantor in favor of the Collateral Agent, which pledge agreements will provide for the pledge of such shares of Capital Stock
in accordance with the laws of the applicable foreign jurisdiction. With respect to such shares of Capital Stock, the Collateral Agent
may, at any time and from time to time, in its sole discretion, take actions in such foreign jurisdictions that will result in the perfection
of the Lien created in such shares of Capital Stock.
(n) Article
12 Collateral.
(i) Each
Grantor covenants and agrees that:
(A) If
any Custodian holding the Article 12 Collateral is not reasonably satisfactory to the Collateral Agent, the Collateral Agent may direct
such Article 12 Collateral to be held by a new Custodian reasonably acceptable to the Collateral Agent and the applicable Grantor and
such Grantor shall obtain a Custodian Control Agreement with respect to such Custodian and Article 12 Collateral, in each case, at Grantors’
sole cost and expense.
(B) Such
Grantor shall not, and shall not permit any other Person to, amend or make any changes to the authorized signatories of, or persons authorized
to make changes to, any Custodial Account holding or controlling any Article 12 Collateral without the prior written consent of the Collateral
Agent, in its sole discretion.
Collateral Agent may, in its sole
discretion, with prior or concurrent written notice to Grantors, specify additional acceptable validators and Custodians or remove validators
and Custodians that are no longer satisfactory to Collateral Agent in connection with the preceding Sections 6(n)(i)(C)-(D).
(ii) The
Grantors shall not, directly or indirectly, after the date hereof, establish a Custodial Account or otherwise maintain any Article 12
Collateral with any Custodian unless each of the following conditions is satisfied: (A) Collateral Agent shall have received not less
than five (5) Business Days’ prior written notice of the intention of such Grantor to open or establish such Custodial Account,
which notice shall specify in reasonable detail and specificity acceptable to Collateral Agent the type, nature and quantity of the Article
12 Collateral, the owner of the Article 12 Collateral, the name and address of the Custodian at which such Custodial Account is to be
established and Article 12 Collateral is to be maintained or held, the individual at such Custodian with whom such Grantor is dealing
and the purpose of the Custodial Account and related Article 12 Collateral, (B) the Custodian where such account is opened or maintained
shall be acceptable to Collateral Agent and (C) such account shall be subject to a Custodian Control Agreement.
(iii) On
or before the date which is ten (10) Business Days following the end of each calendar quarter, Grantors shall deliver to Collateral Agent
an updated Schedule IV listing all of Grantors’ Custodial Accounts holding any Article 12 Collateral.
(iv) Each
Grantor further covenants and agrees, to the extent that any Collateral constitutes Article 12 Collateral or Transferable Records, to
notify Collateral Agent thereof within five (5) Business Days and to take all steps requested by Collateral Agent to cause the security
interest of Collateral Agent in such Article 12 Collateral or such Transferable Records to be perfected by Control or as otherwise provided
in Sections 7-106, 9-105, 9-105A, 9-106, 9-107A, 9-314, 9-314A and 12-105 of the Code of any applicable jurisdiction or Section 16 of
the UETA as adopted in any applicable jurisdiction (or similar provision of any similar statute of any jurisdiction)
21
or Subchapter II
of the Electronic Signatures in Global and National Commerce Act at 15 U.S.C. §7001 et seq. Each Grantor agrees that it will not
transfer Collateral out of any system or platform providing for Control of any Article 12 Collateral in favor of Collateral Agent, unless
(A) such transfer is permitted hereunder or under the Securities Purchase Agreement or (B) such Grantor, Collateral Agent and any
relevant Custodian or other third parties have entered into arrangements with a substitute system reasonably satisfactory to Collateral
Agent to cause Collateral Agent’s perfected Lien in such Collateral to be established and continued on such substitute system. No
arrangement contemplated hereby or in connection with any system or platform providing for Control of any Article 12 Collateral in favor
of Collateral Agent shall be modified in any manner adverse to Collateral Agent, nor shall any Grantor consent to any such modification,
without the prior written consent of Collateral Agent.
(o) Post
Closing. Notwithstanding anything to the contrary contained herein or any other Transaction Document, each applicable Grantor
shall:
(i) Insurance
Certificates. Within fourteen (14) calendar days following the Closing Date, deliver to the Collateral Agent, in form and substance
satisfactory to the Collateral Agent, insurance certificates issued by each Grantor’s insurance brokers containing such information
regarding such Grantor’s insurance policies (including, without limitation, policies related to comprehensive general liability,
casualty and property, hazard, rent and business interruption insurance) as the Collateral Agent shall request and naming the Collateral
Agent as an additional insured or lenders loss payee, as applicable; and
(ii) Insurance
Endorsements. Within thirty (30) calendar days following the Closing Date, deliver to the Collateral Agent, in form and substance
satisfactory to the Collateral Agent, additional insured, lender loss payable, and notice of cancellation endorsements issued by each
Grantor’s insurers with respect to such Grantor’s insurance policies (including, without limitation, policies related to comprehensive
general liability, casualty and property, hazard, rent and business interruption insurance) as the Collateral Agent shall request naming
the Collateral Agent as additional insured or lender loss payee, as applicable.
Section
7. Additional Provisions Concerning the Collateral.
(a) To
the maximum extent permitted by applicable law, and for the purpose of taking any action that the Collateral Agent may deem necessary
or advisable to accomplish the purposes of this Agreement, each Grantor hereby (i) authorizes the Collateral Agent to execute any such
agreements, instruments or other documents in such Grantor’s name and to file such agreements, instruments or other documents in
such Grantor’s name and in any appropriate filing office, (ii) authorizes the Collateral Agent at any time and from time to time
to file, one or more financing or continuation statements, and amendments thereto, relating to the Collateral (including, without limitation,
any such financing statements that (A) describe the Collateral as “all assets” or “all personal property” (or
words of similar effect) or that describe or identify the Collateral by type or in any other manner as the Collateral Agent may determine
regardless of whether any particular asset of such Grantor falls within the scope of Article 9 of the Code or whether any particular asset
of such Grantor constitutes part of the Collateral, and (B) contain any other information required by Part 5 of Article 9 of the Code
for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including, without limitation,
whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor)
and (iii) ratifies such authorization to the extent that the Collateral Agent has filed any such financing or continuation statements,
or amendments thereto, prior to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering
the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.
(b) Each
Grantor hereby irrevocably appoints the Collateral Agent as its attorney-in-fact and proxy, with full authority in the place and stead
of such Grantor and in the name of such Grantor or otherwise, from time to time in the Collateral Agent’s discretion, to take any
action and to execute any instrument which the Collateral Agent may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, (i) to obtain and adjust insurance required to be paid to the Collateral Agent pursuant to Section 6(e)
hereof, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become
due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel
Paper in connection with clause (i) or (ii) above, (iv) to file any claims or take any action or institute any action, suit or proceedings
which the Collateral Agent may deem necessary or desirable for the collection of any Collateral or otherwise to enforce the rights of
the Collateral Agent and the Noteholders with respect to any Collateral, (v) to execute assignments, licenses and other documents to enforce
the rights of the Collateral Agent and the Noteholders with respect to any Collateral, and (vi) to verify any and all information with
respect to any and all Accounts. This power is coupled with an interest and is irrevocable until all of the Obligations are fully performed
and Paid in Full.
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(c) For
the purpose of enabling the Collateral Agent to exercise rights and remedies hereunder, at such time as the Collateral Agent shall be
lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby grants to the Collateral Agent,
to the extent assignable, an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to any Grantor)
to use, assign, license or sublicense any Intellectual Property in which such Grantor now or hereafter has any right, title or interest,
wherever the same may be located, including, without limitation, in such license reasonable access to all media in which any of the licensed
items may be recorded or stored and to all computer programs used for the compilation or printout thereof. Notwithstanding anything contained
herein to the contrary, but subject to the provisions of the Securities Purchase Agreement that limit the right of any Grantor to dispose
of its property, and Section 6(g) and Section 6(h) hereof, so long as no Event of Default shall have occurred and be continuing,
any Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the
Intellectual Property in the ordinary course of its business and as otherwise expressly permitted by any of the other Transaction Documents.
In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Collateral Agent shall from time
to time, upon the request of any Grantor, execute and deliver any instruments, certificates or other documents, in the form so requested,
which such Grantor shall have certified are appropriate (in such Grantor’s judgment) to allow it to take any action permitted above
(including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property). Further, upon the full
performance and Payment in Full of all of the Obligations, the Collateral Agent (subject to Section 11(e) hereof) shall release
and reassign to any Grantor all of the Collateral Agent’s right, title and interest in and to the Intellectual Property, and the
Licenses, all without recourse, representation or warranty whatsoever. The exercise of rights and remedies hereunder by the Collateral
Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by each Grantor in accordance with
the second sentence of this clause (c). Each Grantor hereby releases the Collateral Agent from any claims, causes of action and demands
at any time arising out of or with respect to any actions taken or omitted to be taken by the Collateral Agent under the powers of attorney
granted herein other than actions taken or omitted to be taken through the Collateral Agent’s gross negligence or willful misconduct,
as determined by a final judgment of a court of competent jurisdiction no longer subject to appeal.
(d) If
any Grantor fails to perform any agreement or obligation contained herein, the Collateral Agent may itself perform, or cause performance
of, such agreement or obligation, in the name of such Grantor or the Collateral Agent, and the expenses of the Collateral Agent incurred
in connection therewith shall be payable by such Grantor pursuant to Section 9 hereof and such obligation shall be secured by the
Collateral.
(e) The
powers conferred on the Collateral Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. Except for the safe custody of any Collateral in its possession and the accounting for monies actually
received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral.
(f) Anything
herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise with respect to any
of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement
had not been executed, (ii) the exercise by the Collateral Agent of any of its rights or remedies hereunder shall not release any
Grantor from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Collateral Agent
shall not have any obligation or liability by reason of this Agreement under the Licenses or with respect to any of the other Collateral,
nor shall the Collateral Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
(g) As
long as no Event of Default shall have occurred and be continuing and, other than in the case of a Bankruptcy Event of Default, until
written notice shall be given to the applicable Grantor:
(i) Each
Grantor shall have the right, from time to time, to vote and give consents with respect to the Pledged Equity, or any part thereof for
all purposes not inconsistent with the provisions of this Agreement, the Securities Purchase Agreement or any other Transaction Document;
provided, however, that no vote shall be cast, and no consent shall be given or action taken, which would have the effect of impairing
the position or interest of the Collateral Agent in respect of the Pledged Equity or which would authorize, effect or consent to (unless
and to the extent expressly permitted by the Securities Purchase Agreement):
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(A) the
dissolution or liquidation, in whole or in part, of a Pledged Entity;
(B) the
consolidation or merger of a Pledged Entity with any other Person;
(C) the
sale, disposition or encumbrance of all or substantially all of the assets of a Pledged Entity, except for Liens in favor of the Collateral
Agent;
(D) any
change in the authorized number of shares, the stated capital or the authorized share capital of a Pledged Entity or the issuance of any
additional shares of its Capital Stock; or
(E) the
alteration of the voting rights with respect to the Capital Stock of a Pledged Entity.
(h) (i) Each Grantor shall
be entitled, from time to time, to collect and receive for its own use all cash dividends and interest paid in respect of the Pledged
Equity to the extent not in violation of the Securities Purchase Agreement or any other Transaction Document other than any and all: (A) dividends
and interest paid or payable other than in cash in respect of any Pledged Equity, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged Equity; (B) dividends and other distributions paid or payable
in cash in respect of any Pledged Equity in connection with a partial or total liquidation or dissolution or in connection with a reduction
of capital, capital surplus or paid-in capital of a Pledged Entity; and (C) cash paid, payable or otherwise distributed, in respect of
principal of, or in redemption of, or in exchange for, any Pledged Equity; provided, however, that until actually paid all rights to such
distributions shall remain subject to the Lien created by this Agreement; and
(ii) all
dividends and interest (other than such cash dividends and interest as are permitted to be paid to any Grantor in accordance with clause
(i) above) and all other distributions in respect of any of the Pledged Equity, whenever paid or made, shall be delivered to the Collateral
Agent to hold as Pledged Equity and shall, if received by any Grantor, be received in trust for the benefit of the Collateral Agent (for
the ratable benefit of the Collateral Agent and the Noteholders), be segregated from the other property or funds of such Grantor, and
be forthwith delivered to the Collateral Agent as Pledged Equity in the same form as so received (with any necessary endorsement).
Remedies Upon Event of Default;
Application of Proceeds. If any Event of Default shall have occurred and be continuing:
(a) The
Collateral Agent may exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein, in any other
Transaction Document or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether
or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without
limitation, transfer into the Collateral Agent’s name or into the name of its nominee or nominees (to the extent the Collateral
Agent has not theretofore done so) and thereafter receive, for the ratable benefit of itself and the Noteholders, all payments made thereon,
give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright
owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Collateral
Agent forthwith, assemble all or part of its respective Collateral as directed by the Collateral Agent and make it available to the Collateral
Agent at a place or places to be designated by the Collateral Agent that is reasonably convenient to both parties, and the Collateral
Agent may enter into and occupy any premises owned or leased by any Grantor where the Collateral or any part thereof is located or assembled
for a reasonable period in order to effectuate the Collateral Agent’s rights and remedies hereunder or under law, without obligation
to any Grantor in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare
or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale
(including, without limitation, by credit bid), at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for
future delivery, and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable and/or
(B) lease, license or dispose of the Collateral or any part thereof upon such terms as the Collateral Agent may deem commercially
reasonable. Each Grantor agrees that,
24
to the extent notice of sale or any other disposition of its respective Collateral shall be required
by law, at least ten (10) days’ notice to any Grantor of the time and place of any public sale or the time after which any private
sale or other disposition of its respective Collateral is to be made shall constitute reasonable notification. Each Grantor further recognizes
and agrees that if the Article 12 Collateral, or any portion thereof, is of a type customarily sold on a recognized market, Grantors shall
not be entitled to any prior notice of sale or other intended disposition. The Collateral Agent shall not be obligated to make any sale
or other disposition of any Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against the Collateral Agent and the Noteholders
arising by reason of the fact that the price at which its respective Collateral may have been sold at a private sale was less than the
price which might have been obtained at a public sale or was less than the aggregate amount of the Obligations, even if the Collateral
Agent accepts the first offer received and does not offer such Collateral to more than one offeree, and waives all rights that any Grantor
may have to require that all or any part of such Collateral be marshaled upon any sale (public or private) thereof. Each Grantor hereby
acknowledges that (i) any such sale of its respective Collateral by the Collateral Agent shall be made without warranty, (ii) the
Collateral Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, and (iii) such actions
set forth in clauses (i) and (ii) above shall not adversely affect the commercial reasonableness of any such sale of Collateral.
In addition to the foregoing, (1) upon written notice to any Grantor from the Collateral Agent after and during the continuance of
an Event of Default, such Grantor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto
for any purpose described in such notice; (2) the Collateral Agent may, at any time and from time to time after and during the continuance
of an Event of Default, upon 10 days’ prior notice to such Grantor, license, whether general, special or otherwise, and whether
on an exclusive or non-exclusive basis, any of the Intellectual Property, throughout the universe for such term or terms, on such conditions,
and in such manner, as the Collateral Agent shall in its sole discretion determine; and (3) the Collateral Agent may, at any time, pursuant
to the authority granted in Section 7 hereof or otherwise (such authority being effective upon the occurrence and during the continuance
of an Event of Default), execute and deliver on behalf of such Grantor, one or more instruments of assignment of the Intellectual Property
(or any application or registration thereof), in form suitable for filing, recording or registration in any country.
(b) Any
cash held by the Collateral Agent as Collateral and all Cash Proceeds received by the Collateral Agent in respect of any sale or disposition
of or collection from, or other realization upon, all or any part of the Collateral shall be applied as follows (subject to the provisions
of the Securities Purchase Agreement): first, to pay any fees, indemnities or expense reimbursements then due to the Collateral
Agent (including, without limitation, those described in Section 9 hereof); second, to pay any fees, indemnities or expense
reimbursements then due to the Noteholders, on a pro rata basis; third to pay interest due under the Notes owing to the Noteholders,
on a pro rata basis; fourth, to pay or prepay principal in respect of the Notes, whether or not then due, owing to the Noteholders,
on a pro rata basis; fifth, to pay or prepay any other Obligations, whether or not then due, in such order and manner as the Collateral
Agent shall elect, consistent with the provisions of the Securities Purchase Agreement. Any surplus of such cash or Cash Proceeds held
by the Collateral Agent and remaining after the full performance and Payment in Full of all of the Obligations shall be paid over to whomsoever
shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.
(c) In
the event that the proceeds of any such sale, disposition, collection or realization are insufficient to pay all amounts to which the
Collateral Agent and the Noteholders are legally entitled, each Grantor shall be, jointly and severally, liable for the deficiency, together
with interest thereon at the highest rate specified in the Notes for interest on overdue principal thereof or such other rate as shall
be fixed by applicable law, together with the costs of collection and the reasonable fees, costs, expenses and other charges of any attorneys
employed by the Collateral Agent to collect such deficiency.
25
(d) To
the extent that applicable law imposes duties on the Collateral Agent to exercise rights and
remedies in a commercially reasonable manner, each Grantor acknowledges and agrees that it
is commercially reasonable for the Collateral Agent (i) to fail to incur expenses deemed significant
by the Collateral Agent to prepare Collateral for disposition or otherwise to transform raw
material or work in process into finished goods or other finished products for disposition, (ii) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or disposed of, (iii) to fail to exercise collection remedies
against Account Debtors or other Persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (iv)
to exercise collection remedies against Account Debtors and other Persons obligated on Collateral directly or through the use of collection
agencies and other collection specialists, (v) to advertise dispositions of Collateral through publications or media of general circulation,
whether or not the Collateral is of a specialized nature, (vi) to contact other Persons, whether or not in the same business as any Grantor,
for expressions of interest in acquiring all or any portion of such Collateral, (vii) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capacity
of doing so, or that match buyers and sellers of assets, (ix) to dispose of assets in wholesale rather than retail markets, (x) to disclaim
disposition warranties, such as title, possession or quiet enjoyment, (xi) to purchase insurance or credit enhancements to insure the
Collateral Agent against risks of loss, collection or disposition of Collateral or to provide
to the Collateral Agent a guaranteed return from the collection or disposition of Collateral,
or (xii) to the extent deemed appropriate by the Collateral Agent, to obtain the services
of brokers, investment bankers, consultants, attorneys and other professionals to assist the Collateral Agent in
the collection or disposition of any of the Collateral. Each Grantor acknowledges that the
purpose of this section is to provide non-exhaustive indications of what actions or omissions by the Collateral Agent would
be commercially reasonable in the Collateral Agent’s exercise of rights and remedies
against the Collateral and that other actions or omissions by the Collateral Agent shall not
be deemed commercially unreasonable solely on account of not being indicated in this section. Without limitation of the foregoing, nothing
contained in this section shall be construed to grant any rights to any Grantor or to impose
any duties on the Collateral Agent that would not have been granted or imposed by this Agreement
or by applicable law in the absence of this section.
(e) The
Collateral Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement
and the Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of the Collateral Agent’s rights and remedies hereunder and in respect
of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however
existing or arising. To the extent that any Grantor lawfully may, each Grantor hereby agrees that it will not invoke any law relating
to the marshaling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s rights and remedies
under this Agreement or under any other instrument creating or evidencing any of the Obligations or under which any of the Obligations
is outstanding or by which any of the Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully
may, each Grantor hereby irrevocably waives the benefits of all such laws.
(f) The
Collateral Agent may provide any notice or execute any actions in respect of any system or platform on which any Article 12 Collateral
subject to a Custodian Control Agreement is recorded or maintained to realize upon such Article 12 Collateral, and to remit the proceeds
thereof to an account specified by the Collateral Agent to be applied to the Obligations in accordance with the Securities Purchase Agreement.
Section
9. Indemnity and Expenses.
(a) Each
Grantor agrees, jointly and severally, to defend, protect, indemnify and hold the Collateral Agent and each of the Noteholders harmless
from and against any and all claims, damages, losses, liabilities, obligations, penalties, fees, costs and expenses (including, without
limitation, reasonable legal fees, costs, expenses, and disbursements of such Person’s counsel) to the extent that they arise out
of or otherwise result from this Agreement (including, without limitation, enforcement of this Agreement), except to the extent resulting
from such Person’s gross negligence or willful misconduct, as determined by a final judgment of a court of competent jurisdiction
no longer subject to appeal.
26
(b) Each
Grantor agrees, jointly and severally, to pay to the Collateral Agent upon demand the amount of any and all costs and expenses, including
the reasonable fees, costs, expenses and disbursements of counsel for the Collateral Agent and of any experts and agents (including, without
limitation, any collateral trustee which may act as agent of the Collateral Agent), which the Collateral Agent may incur in connection
with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification
or termination of this Agreement or any other Transaction Documents, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any Collateral (including but not limited to taxes, assessments, insurance premiums,
custody fees, repairs, rent, storage costs and expenses of sales and any costs to perfect the security interest of the Collateral Agent),
(iii) the exercise or enforcement of any of the rights or remedies of the Collateral Agent hereunder or under any other Transaction
Document, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof or any other Transaction Document
(collectively, “Collateral Costs”). Without waiving such Grantor’s Event of Default (if any) for failure to make
any such payment, the Collateral Agent, following any such failure, at its option may pay any such Collateral Costs, and discharge encumbrances
on the Collateral, and such Collateral Costs payments shall be a part of the Obligations and bear interest at the rate set out in the
Notes. Without limiting the generality of the foregoing, each Grantor agrees to reimburse the Collateral Agent on demand for any Collateral
Costs reasonably incurred, including but not limited to Collateral Costs incurred in connection with each Custodian Control Agreement
and the wallets and accounts maintained in each Grantor’s name in connection therewith.
Notices, Etc.
All notices and other communications provided for hereunder shall be in writing and shall be mailed (by certified mail, first-class postage
prepaid and return receipt requested), telecopied, e-mailed or delivered, (a) if to any Grantor, to the Company’s address, email
address and/or facsimile number as set forth in Section 9(f) of the Securities Purchase Agreement, (b) if to any Buyer, to it at its respective
address, email address and/or facsimile number as set forth in Section 9(f) of the Securities Purchase Agreement or (c) if to Collateral
Agent, to it at its respective address, email address and/or facsimile number as set forth on its signature page hereto; or as to any
such Person, at such other address as shall be designated by such Person in a written notice to all other parties hereto complying as
to delivery with the terms of this Section 10. All such notices and other communications shall be effective (a) if sent by certified mail,
return receipt requested, when received or five (5) Business Days after deposited in the mails, whichever occurs first, (b) if telecopied
or e-mailed, when transmitted (during normal business hours) and confirmation is received, and otherwise, the day after the notice or
communication was transmitted and confirmation is received, or (c) if delivered in person, upon delivery. For the avoidance of doubt,
all Foreign Subsidiaries, as Grantors, hereby appoint the Company as its agent for receipt of service of process and all notices and other
communications in the United States at the address specified below.
Section
11. Miscellaneous.
(a) No
amendment of any provision of this Agreement shall be effective unless it is in writing and signed by each Grantor and the Collateral
Agent (and approved by the Required Holders), and no waiver of any provision of this Agreement, and no consent to any departure by each
Grantor therefrom, shall be effective unless it is in writing and signed by each Grantor and the Collateral Agent (and approved by the
Required Holders), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which
given. No amendment, modification or waiver of this Agreement shall be effective to the extent that it (1) applies to fewer than all of
the holders of Notes or (2) imposes any obligation or liability on any holder of Notes without such holder’s prior written consent
(which may be granted or withheld in such holder’s sole and absolute discretion).
(b) No
failure on the part of the Collateral Agent to exercise, and no delay in exercising, any right or remedy hereunder or under any of the
other Transaction Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any such right or remedy preclude
any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies of the Collateral Agent or
any Noteholder provided herein and in the other Transaction Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law. The rights and remedies of the Collateral Agent or any Noteholder under any of the other Transaction
Documents against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights or remedies
under any of the other Transaction Documents against such party or against any other Person, including but not limited to, any Grantor.
27
(c) Any
provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.
(d) This
Agreement shall create a continuing Lien on and security interest in the Collateral and shall (i) remain in full force and effect until
the full performance and Payment in Full of the Obligations, and (ii) be binding on each Grantor and all other Persons who become bound
as debtor to this Agreement in accordance with Section 9-203(d) of the Code and shall inure, together with all rights and remedies of
the Collateral Agent and the Noteholders hereunder, to the ratable benefit of the Collateral Agent and the Noteholders and their respective
permitted successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, without
notice to any Grantor, the Collateral Agent and the Noteholders may assign or otherwise transfer their rights and obligations under this
Agreement and any of the other Transaction Documents, to any other Person and such other Person shall thereupon become vested with all
of the benefits in respect thereof granted to the Collateral Agent and the Noteholders herein or otherwise. Upon any such assignment or
transfer, all references in this Agreement to the Collateral Agent or any such Noteholder shall mean the assignee of the Collateral Agent
or such Noteholder. None of the rights or obligations of any Grantor hereunder may be assigned, delegated or otherwise transferred without
the prior written consent of the Collateral Agent in its sole and absolute discretion, and any such assignment, delegation or transfer
without such consent of the Collateral Agent shall be null and void.
(e) Upon
the full performance and Payment in Full of the Obligations, (i) this Agreement and the security interests created hereby shall terminate
and all rights to the Collateral shall revert to the respective Grantor that granted such security interests hereunder, and (ii) the Collateral
Agent will, upon any Grantor’s request and at such Grantor’s expense, (A) return to such Grantor such of the Collateral as
shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to such Grantor
such documents as such Grantor shall reasonably request to evidence such termination, all without any representation, warranty or recourse
whatsoever; provided, however, that all indemnities of the Grantors contained in this Agreement shall survive, and remain in full force
and effect regardless of the termination of the security interest or this Agreement. Notwithstanding the foregoing, this Agreement and
the security interests granted hereunder shall be reinstated if at any time any payment or delivery pursuant to the Securities Purchase
Agreement, in whole or in part, is rescinded or must otherwise be returned by the Collateral Agent or any Buyer under the application
of the Bankruptcy Code or any other debtor law, all as though such payment or delivery had not been made.
(f) Governing
Law; Jurisdiction; Jury Trial.
(i) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of New York, without giving effect to any provision or rule of law (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdiction other than the State of New York.
(ii) Each
Grantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough
of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents
or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim, defense or objection that it is not personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing
a copy thereof to such party at the address for such notices to it under Section 9(f) of the Securities Purchase Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to
preclude the Collateral Agent or the Noteholders from bringing suit or taking other legal action against any Grantor in any other jurisdiction
to collect on a Grantor’s obligations or to enforce a judgment or other court ruling in favor of the Collateral Agent or a Noteholder.
28
(iii) WAIVER
OF JURY TRIAL, ETC. EACH GRANTOR IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(iv) Each
Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred
to in this Section any special, exemplary, indirect, incidental, punitive or consequential damages.
(g) Section
headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.
(h) This
Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall
be deemed to be an original, but all of which taken together constitute one and the same Agreement. Delivery of any executed counterpart
of a signature page of this Agreement by pdf, facsimile or other electronic transmission shall be effective as delivery of a manually
executed counterpart of this Agreement.
(i) This
Agreement shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Obligations is
rescinded or must otherwise be returned by the Collateral Agent, any Noteholder or any other Person (upon (i) the occurrence of any Insolvency
Proceeding of any of the Company or any Grantor or (ii) otherwise, in all cases as though such payment had not been made).
Material Non-Public Information.
Upon receipt or delivery by any Grantor of any notice in accordance with the terms of this Agreement, unless such Grantor has in good
faith determined that the matters relating to such notice do not constitute material, non-public information relating to the Grantor or
any of its Subsidiaries, such Grantor shall within one (1) Business Day after any such receipt or delivery publicly disclose such material,
non-public information on a Current Report on Form 8-K or otherwise. In the event that such Grantor believes that a notice contains material,
non-public information relating to such Grantor or any of its Subsidiaries, such Grantor so shall indicate to the Collateral Agent and
any applicable Noteholder contemporaneously with delivery of such notice, and in the absence of any such indication, the Collateral Agent
and each Noteholder shall be allowed to presume that all matters relating to such notice do not constitute material, non-public information
relating to such Grantor or its Subsidiaries. Nothing contained in this Section 12 shall limit any obligations of any Grantor,
or any rights or remedies of the Collateral Agent or any Noteholder, under Section 4(i) of the Securities Purchase Agreement.
[REMAINDER OF THIS
PAGE INTENTIONALLY LEFT BLANK]
29
IN WITNESS WHEREOF, each Grantor
has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.
GRANTORS:
SADOT GROUP INC.
By:
Name: Haggai Ravid
Title: Chief Executive Officer
ACCEPTED BY:
[•], as Collateral Agent
By:
Name: [•]
Title: [•]
30
EXHIBIT A
FORM OF INTELLECTUAL
PROPERTY SECURITY AGREEMENT
INTELLECTUAL PROPERTY SECURITY AGREEMENT
This INTELLECTUAL PROPERTY SECURITY
AGREEMENT (as amended, modified, supplemented, renewed, restated or replaced from time to time, this “IP Security Agreement”),
dated as of [●], 2026, is made by the Persons listed on the signature pages hereof (collectively, the “Grantors”)
in favor of [•], in its capacity as collateral agent (the “Collateral Agent”) for the Noteholders. All capitalized
terms not otherwise defined herein shall have the meanings respectively ascribed thereto in the Security Agreement (as defined below).
WHEREAS, Sadot Group Inc., a Nevada
corporation (the “Company”) and each party listed as a “Buyer” therein (collectively, the “Buyers”)
are parties to that certain Securities Purchase Agreement, dated July 16, 2026, pursuant to which the Company shall be required to sell,
and the Buyers shall purchase or have the right to purchase, the “Notes” (as defined therein) issued pursuant thereto (as
such Notes may be amended, modified, supplemented, renewed, restated or replaced from time to time in accordance with the terms thereof,
collectively, the “Notes”);
WHEREAS, it is a condition precedent
to the purchase of the Notes under the Securities Purchase Agreement that each Grantor has executed and delivered that certain Security
and Pledge Agreement, dated July 16, 2026, made by the Grantors to the Collateral Agent (as amended, modified, supplemented, renewed,
restated or replaced from time to time, the “Security Agreement”);
WHEREAS, under the terms of the
Security Agreement, the Grantors have granted to the Collateral Agent, for the ratable benefit of the Collateral Agent and the Noteholders,
a Lien on and security interest in, among other property, certain intellectual property of the Grantors, and have agreed as a condition
thereof to execute this IP Security Agreement for recording with the U.S. Patent and Trademark Office, the United States Copyright Office
and other governmental authorities; and
WHEREAS, the Grantors have determined
that the execution, delivery and performance of this IP Security Agreement directly benefits, and is in the best interest of, the Grantors.
NOW, THEREFORE, in consideration
of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities Purchase Agreement, each Grantor
agrees with the Collateral Agent, for the ratable benefit of the Collateral Agent and the Noteholders, as follows:
SECTION 1. Grant of Security.
As collateral security for the due and punctual payment and performance in full of the Obligations, as and when due, each Grantor hereby
pledges and assigns to the Collateral Agent, its successors and permitted assigns, and hereby grants to the Collateral Agent, its successors
and permitted assigns, for the ratable benefit of the Collateral Agent and the Noteholders, a continuing Lien on and security interest
in, all of such Grantor’s right, title and interest in, to and under the following (the “Collateral”):
(i) the
Patents and Patent applications set forth in Schedule A hereto;
(ii) the
Trademark and service mark registrations and applications set forth in Schedule B hereto (provided that no security interest
shall be granted in United States intent-to-use trademark applications to the extent that, and solely during the period in which, the
grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark applications under applicable
federal law), together with the goodwill symbolized thereby;
(iii) all
Copyrights, whether registered or unregistered, now owned or hereafter acquired by such Grantor, including, without limitation, the copyright
registrations and applications and exclusive copyright licenses set forth in Schedule C hereto;
31
(iv) all
reissues, divisions, continuations, continuations-in-part, extensions, renewals and reexaminations of any of the foregoing, all rights
in the foregoing provided by international treaties or conventions, all rights corresponding thereto throughout the world and all other
rights of any kind whatsoever of such Grantor accruing thereunder or pertaining thereto;
(v) any
and all claims for damages and injunctive relief for past, present and future infringement, dilution, misappropriation, violation, misuse
or breach with respect to any of the foregoing, with the right, but not the obligation, to sue for and collect, or otherwise recover,
such damages; and
(vi) any
and all Proceeds, including without limitation Cash and Noncash Proceeds of, collateral for, income, royalties and other payments now
or hereafter due and payable with respect to, and Supporting Obligations relating to, any and all of the collateral of or arising from
any of the foregoing.
SECTION 2. Security for Obligations.
The grant of a Lien on and security interest in, the Collateral by each Grantor under this IP Security Agreement constitutes continuing
collateral security for the payment and performance of all Obligations of such Grantor now or hereafter existing under or in respect of
the Notes and the Transaction Documents, whether direct or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract causes of action, costs, expenses or otherwise.
SECTION 3. Recordation.
Each Grantor authorizes and requests that the Register of Copyrights, the Commissioner for Patents and the Commissioner for Trademarks
and any other applicable government officer record this IP Security Agreement.
SECTION 4. Execution in Counterparts.
This IP Security Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together constitute one and the same agreement.
SECTION 5. Grants, Rights and
Remedies. This IP Security Agreement has been entered into in conjunction with the provisions of the Security Agreement. Each Grantor
does hereby acknowledge and confirm that the grant of the Lien and security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which
are incorporated herein by reference as if fully set forth herein.
SECTION 6. Governing
Law; Jurisdiction; Jury Trial.
(i) All
questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of New York, without giving effect to any provision or rule of law (whether of the State of New York or any other jurisdictions)
that would cause the application of the laws of any jurisdiction other than the State of New York.
(ii) Each
Grantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in New York, New York, for the
adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction Documents or with any transaction
contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim,
defense or objection that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to the
Company at the address for such notices to it under Section 9(f) of the Securities Purchase Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Collateral
Agent or the Noteholders from bringing suit or taking other legal action against any Grantor in any other jurisdiction to collect on a
Grantor’s obligations or to enforce a judgment or other court ruling in favor of the Collateral Agent or a Noteholder.
32
(iii) WAIVER
OF JURY TRIAL, ETC. EACH GRANTOR IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
(iv) Each
Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding referred
to in this Section any special, exemplary, indirect, incidental, punitive or consequential damages.
[The remainder of the page is intentionally
left blank]
33
IN WITNESS WHEREOF, each Grantor
has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.
SADOT GROUP INC.
By
Name:
Title:
Address for Notices:
IN WITNESS WHEREOF, each Grantor
has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written.
[_____________][1]
By
Name:
Title:
Address for Notices:
ACCEPTED BY:
[•], as Collateral Agent
By:
Name: [•]
Title: [•]
Schedule A
Patents
Grantor
Title
Application/
Patent Number
Schedule B
Trademarks
Grantor
Mark
Serial/
Registration Number
Schedule C
Copyrights
Grantor
Copyright
Serial/
Registration Number
Application/
Registration Date
SCHEDULE I
Legal Names; Organizational Identification Numbers;
States or Jurisdiction of Organization
Grantor’s Name
State / Country of Organization / Incorporation
Federal
Employer I.D.
Organizational I.D.
SCHEDULE II
Intellectual Property
Issued Patents
Grantor
Title
Application/
Patent Number
Patent Applications
Grantor
Title
Application/
Patent Number
Trademark Registrations
Grantor
Mark
Serial/
Registration Number
Trademark Applications
Grantor
Mark
Serial/
Registration Number
Copyrights
Grantor
Copyright
Serial/
Registration Number
Application/
Registration Date
Domain Names
1. [●]
Intellectual Property owned by any Grantor that is the subject of any
licensing or franchise agreement pursuant to which any Grantor is the licensor or franchisor:
1. [●]
Licenses
1. [●]
SCHEDULE III
Locations
Grantor’s Name
Chief Executive Office
Chief Place of Business
Books and Records
Inventory,
Equipment, Etc.
SCHEDULE IV
Promissory Notes, Securities, Deposit Accounts
and Securities Accounts
Promissory Notes:
· [●]
Investment Property:
· [●]
Partnership/LLC Interests:
· [●]
Capital Stock:
· [●]
Deposit Accounts, Securities Accounts and Commodities Accounts
Owner
Financial Institution
Account Number
General Purpose
[●]
[●]
[●]
[●]
Foreign Currency Controlled Accounts
[●]
Article 12 Collateral
Owner
Type of Controllable Electronic Record
Custodian/Brokerage
Type of Account
Account Number(s)
Springing Custodial Accounts and Article 12 Collateral
Owner
Type of Controllable Electronic Record
Custodian/Brokerage
Type of Account
Account Number(s)
SCHEDULE V
Financing Statements
Grantor
Jurisdiction for Filing Financing Statement
SCHEDULE VI
Commercial Tort Claims
EX-10.5 — EXHIBIT 10.5
EX-10.5
Filename: e7788_ex10-5.htm · Sequence: 9
EXHIBIT 10.5
GUARANTY
This GUARANTY, dated as of July
16, 2026 (this “Guaranty”), is made by each of the undersigned (each a “Guarantor”, and collectively,
the “Guarantors”), in favor of [•], in its capacity as collateral agent (in such capacity, the “Collateral
Agent” as hereinafter further defined) for the “Buyers” party to the Securities Purchase Agreement (each as defined
below).
W I T N E S S E T H:
WHEREAS, Sadot Group Inc., a Nevada
corporation with offices located at 295 E. Renfro street, Suite 300, Burleson, Texas 76028 (the “Company”), and each
party listed as a “Buyer” on the Schedule of Buyers attached thereto (collectively, the “Buyers”)
are parties to the Securities Purchase Agreement, dated as of July 16, 2026 (as amended, restated, extended, replaced or otherwise modified
from time to time, the “Securities Purchase Agreement”), pursuant to which the Company shall be required to sell, and
the Buyers shall purchase or have the right to purchase, the Notes (as defined in the Securities Purchase Agreement) issued pursuant thereto
(as such Notes may be amended, modified, supplemented, extended, renewed, restated or replaced from time to time in accordance with the
terms thereof, collectively, the “Notes”);
WHEREAS, the Securities Purchase
Agreement requires that the Guarantors execute and deliver to the Collateral Agent, (i) a guaranty guaranteeing all of the obligations
of the Company under the Securities Purchase Agreement, the Notes and the other Transaction Documents (as defined in the Securities Purchase
Agreement); and (ii) a Security and Pledge Agreement, dated as of the date hereof, granting the Collateral Agent a lien on and security
interest in all of their assets and properties (the “Security Agreement”); and
WHEREAS, each Guarantor has determined
that the execution, delivery and performance of this Guaranty directly benefits, and is in the best interest of, such Guarantor.
NOW, THEREFORE, in consideration
of the premises and the agreements herein and in order to induce the Buyers to perform under the Securities Purchase Agreement, each Guarantor
hereby agrees with the Collateral Agent, for the benefit of the Collateral Agent and each Buyer, as follows:
SECTION 1. Definitions.
Reference is hereby made to the Securities Purchase Agreement, the Security Agreement and the Notes for a statement of the terms thereof.
All terms used in this Guaranty and the recitals hereto which are defined in the Securities Purchase Agreement, the Security Agreement
or the Notes, and which are not otherwise defined herein shall have the same meanings herein as set forth therein. In addition, the following
terms when used in the Guaranty shall have the meanings set forth below:
“Bankruptcy Code”
means Chapter 11 of Title 11 of the United States Code, 11 U.S.C §§ 101 et seq. (or other applicable bankruptcy, insolvency
or similar laws).
“Business Day”
means any day other than Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to
remain closed; provided, however, for clarification, commercial banks shall not be deemed to be authorized or required by law to remain
closed due to “stay at home”, “shelter-in-place”, “non-essential employee” or any other similar orders
or restrictions or the closure of any physical branch locations at the direction of any Governmental Authority so long as the electronic
funds transfer systems (including for wire transfers) of commercial banks in The City of New York generally are open for use by customers
on such day.
“Buyer” or “Buyers”
shall have the meaning set forth in the recitals hereto.
“Capital Stock”
means (i) with respect to any Person that is a corporation, any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock (including, without limitation, any warrants, options, rights or other securities
exercisable or convertible into equity interests or securities of such Person), and (ii) with respect to any Person that is not an individual
or a corporation, any and all partnership, membership, trust or other equity interests of such Person.
“Collateral”
means all assets and properties of the Company and each Guarantor, wherever located and whether now or hereafter existing and whether
now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation, the collateral
described in Section 3(a) of the Security Agreement.
“Collateral Agent”
shall have the meaning set forth in the preamble hereto.
“Company” shall
have the meaning set forth in the recitals hereto.
“Governmental Authority”
means any nation or government, any Federal, state, city, town, municipality, county, local, foreign or other political subdivision thereof
or thereto and any department, commission, board, bureau, court, tribunal, instrumentality, agency or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
“Guaranteed Obligations”
shall have the meaning set forth in Section 2 of this Guaranty.
“Guarantor”
or “Guarantors” shall have the meaning set forth in the preamble hereto.
“Indemnified Party”
shall have the meaning set forth in Section 13(a) of this Guaranty.
“Insolvency Proceeding”
means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency
law or law for the relief of debtors, any proceeding relating to assignments for the benefit
of creditors, formal or informal moratoria, compositions, or extensions generally with creditors, or any proceeding seeking reorganization,
arrangement, or other similar relief.
“Judgment Conversion Date”
shall have the meaning set forth in Section 15 of this Guaranty.
“Judgment Currency”
shall have the meaning set forth in Section 15 of this Guaranty.
“Notes” shall
have the meaning set forth in the recitals hereto.
“Obligation Currency” shall have
the meaning set forth in Section 15 of this Guaranty.
“Obligations”
shall have the meaning set forth in Section 4 of the Security Agreement.
“Other Taxes”
shall have the meaning set forth in Section 12(a)(iv) of this Guaranty.
“Paid in Full”
or “Payment in Full” means the indefeasible payment in full in cash of all of the Guaranteed Obligations.
“Person” means
an individual, corporation, limited liability company, partnership, association, joint-stock company, trust, unincorporated organization,
joint venture or other enterprise or entity or Governmental Authority.
“Securities Purchase Agreement”
shall have the meaning set forth in the recitals hereto.
“Security Agreement”
shall have the meaning set forth in the recitals hereto.
“Subsidiary”
means any Person in which a Guarantor directly or indirectly, (i) owns any of the outstanding Capital Stock or holds any equity or similar
interest of such Person or (ii) controls or operates all or any part of the business, operations or administration of such Person, and
all of the foregoing, collectively, “Subsidiaries”.
“Taxes” shall
have the meaning set forth in Section 12(a) of this Guaranty.
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“Transaction Party”
means the Company and each Guarantor, collectively, “Transaction Parties”.
SECTION 2. Guaranty.
(a) The
Guarantors, jointly and severally, hereby unconditionally and irrevocably, guaranty to the Collateral Agent, for the benefit of the Collateral
Agent and the Buyers, the punctual payment, as and when due and payable, by stated maturity or otherwise, of all Obligations, including,
without limitation, all interest, make-whole and other amounts that accrue after the commencement of any Insolvency Proceeding of the
Company or any Guarantor, whether or not the payment of such interest, make-whole and/or other amounts are enforceable or are allowable
in such Insolvency Proceeding, and all fees, interest, premiums, penalties, causes of actions, costs, commissions, expense reimbursements,
indemnifications and all other amounts due or to become due under any of the Transaction Documents (all of the foregoing collectively
being the “Guaranteed Obligations”), and agree to pay any and all costs and expenses (including counsel fees and expenses)
incurred by the Collateral Agent in enforcing any rights under this Guaranty or any other Transaction Document. Without limiting the generality
of the foregoing, each Guarantor’s liability hereunder shall extend to all amounts that constitute part of the Guaranteed Obligations
and would be owed by the Company to the Collateral Agent or any Buyer under the Securities Purchase Agreement, the Security Agreement
and/or the Notes but for the fact that they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving
any Transaction Party.
(b) Each
Guarantor, and by its acceptance of this Guaranty, the Collateral Agent and each Buyer, hereby confirms that it is the intention of all
such Persons that this Guaranty and the Guaranteed Obligations of each Guarantor hereunder not constitute a fraudulent transfer or conveyance
for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign,
federal, provincial, state, or other applicable law to the extent applicable to this Guaranty and the Guaranteed Obligations of each Guarantor
hereunder. To effectuate the foregoing intention, the Collateral Agent, the Buyers and the Guarantors hereby irrevocably agree that the
Guaranteed Obligations of each Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the
Guaranteed Obligations of such Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.
SECTION 3. Guaranty Absolute; Continuing Guaranty;
Assignments.
(a) The
Guarantors, jointly and severally, guaranty that the Guaranteed Obligations will be paid strictly in accordance with the terms of the
Securities Purchase Agreement, the Notes and the other Transaction Documents, regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any of such terms or the rights of the Collateral Agent or any Buyer with respect thereto. The
obligations of each Guarantor under this Guaranty are independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against any Guarantor to enforce such obligations, irrespective of whether any action is brought against any
Transaction Party or whether any Transaction Party is joined in any such action or actions. The liability of any Guarantor under this
Guaranty shall be as a primary obligor (and not merely as a surety) and shall be irrevocable, absolute and unconditional irrespective
of, and each Guarantor hereby irrevocably waives, to the extent permitted by law, any defenses it may now or hereafter have in any way
relating to, any or all of the following:
(i) any
lack of validity or enforceability of any Transaction Document;
(ii) any
change in the time, manner or place of payment of, or in any other term of, all or any of the Guaranteed Obligations, or any other amendment
or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase in the Guaranteed
Obligations resulting from the extension of additional credit to any Transaction Party or extension of the maturity of any Guaranteed
Obligations or otherwise;
(iii) any
taking, exchange, release or non-perfection of any Collateral;
(iv) any
taking, release or amendment or waiver of or consent to departure from any other guaranty, for all or any of the Guaranteed Obligations;
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(v) any
change, restructuring or termination of the corporate, limited liability company or partnership structure or existence of any Transaction
Party;
(vi) any
manner of application of Collateral or any other collateral, or proceeds thereof, to all or any of the Guaranteed Obligations, or any
manner of sale or other disposition of any Collateral or any other collateral for all or any of the Guaranteed Obligations or any other
Obligations of any Transaction Party under the Transaction Documents or any other assets of any Transaction Party or any of its Subsidiaries;
(vii) any
failure of the Collateral Agent or any Buyer to disclose to any Transaction Party any information relating to the business, condition
(financial or otherwise), operations, performance, properties or prospects of any other Transaction Party now or hereafter known to the
Collateral Agent or any Buyer (each Guarantor waiving any duty on the part of the Collateral Agent or any Buyer to disclose such information);
(viii) taking
any action in furtherance of the release of any Guarantor or any other Person that is liable for the Obligations from all or any part
of any liability arising under or in connection with any Transaction Document without the prior written consent of the Collateral Agent;
or
(ix) any
other circumstance (including, without limitation, any statute of limitations) or any existence of or reliance on any representation by
the Collateral Agent or any Buyer that might otherwise constitute a defense available to, or a discharge of, any Transaction Party or
any other guarantor or surety.
(b) This
Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of any of the Guaranteed Obligations
is rescinded or must otherwise be returned by the Collateral Agent, any Buyer, or any other Person upon the insolvency, bankruptcy or
reorganization of any Transaction Party or otherwise, all as though such payment had not been made.
(c) This
Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations (other
than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each Note (other
than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure to the benefit of and be enforceable by the Collateral Agent, the Buyers, and their respective successors, and
permitted pledgees, transferees and assigns. Without limiting the generality of the foregoing sentence, the Collateral Agent or any Buyer
may pledge, assign or otherwise transfer all or any portion of its rights and obligations under and subject to the terms of any Transaction
Document to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to
the Collateral Agent or such Buyer (as applicable) herein or otherwise, in each case as provided in the Securities Purchase Agreement,
the Security Agreement, such Note or such other Transaction Document.
SECTION 4. Waivers. To
the extent permitted by applicable law, each Guarantor hereby waives promptness, diligence, protest, notice of acceptance and any other
notice or formality of any kind with respect to any of the Guaranteed Obligations and this Guaranty and any requirement that the Collateral
Agent exhaust any right or take any action against any Transaction Party or any other Person or any Collateral. Each Guarantor acknowledges
that it will receive direct and indirect benefits from the financing arrangements contemplated herein and in the other Transaction Documents
and that the waiver set forth in this Section 4 is knowingly made in contemplation of such benefits. The Guarantors hereby waive any right
to revoke this Guaranty, and acknowledge that this Guaranty is continuing in nature and applies to all Guaranteed Obligations, whether
existing now or in the future. Without limiting the foregoing, to the extent permitted by applicable law, each Guarantor hereby unconditionally
and irrevocably waives (a) any defense arising by reason of any claim or defense based upon an election of remedies by the Collateral
Agent or any Buyer that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration,
contribution or indemnification rights of such Guarantor or other rights of such Guarantor to proceed against any of the other Transaction
Parties, any other guarantor or any other Person or any Collateral, and (b) any defense based on any right of set-off or counterclaim
against or in respect of the Guaranteed Obligations of such Guarantor hereunder. Each Guarantor hereby unconditionally and irrevocably
waives any duty on the part of the Collateral Agent or any Buyer to disclose to such Guarantor any matter, fact or thing relating to the
business, condition (financial or otherwise), operations, performance, properties or prospects of any other Transaction Party or any of
its Subsidiaries now or hereafter known by the Collateral Agent or a Buyer.
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SECTION 5. Subrogation.
No Guarantor may exercise any rights that it may now or hereafter acquire against any Transaction Party or any other guarantor that arise
from the existence, payment, performance or enforcement of any Guarantor’s obligations under this Guaranty, including, without limitation,
any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy
of the Collateral Agent or any Buyer against any Transaction Party or any other guarantor or any Collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive
from any Transaction Party or any other guarantor, directly or indirectly, in cash or other property or by set-off or in any other manner,
payment or security solely on account of such claim, remedy or right, unless and until there has been Payment in Full of the Guaranteed
Obligations. If any amount shall be paid to a Guarantor in violation of the immediately preceding sentence at any time prior to Payment
in Full of the Guaranteed Obligations and all other amounts payable under this Guaranty, such amount shall be held in trust for the benefit
of the Collateral Agent and shall forthwith be paid to the Collateral Agent to be credited and applied to the Guaranteed Obligations and
all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Transaction Document,
or to be held as Collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (a) any
Guarantor shall make payment to the Collateral Agent of all or any part of the Guaranteed Obligations, and (b) there has been Payment
in Full of the Guaranteed Obligations, the Collateral Agent will, at such Guarantor’s request and expense, execute and deliver to
such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation
to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment by such Guarantor.
SECTION 6. Representations, Warranties and Covenants.
(a) Each
Guarantor hereby represents and warrants as of the date first written above as follows:
(i) Such
Guarantor (A) is a corporation, limited liability company or limited partnership duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization as set forth on the signature pages hereto, (B) has all requisite corporate, limited
liability company or limited partnership power and authority to conduct its business as now conducted and as presently contemplated and
to execute, deliver and perform its obligations under this Guaranty and each other Transaction Document to which such Guarantor is a party,
and to consummate the transactions contemplated hereby and thereby and (C) is duly qualified to do business and is in good standing in
each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such
qualification necessary except where the failure to be so qualified (individually or in the aggregate) would not result in a Material
Adverse Effect.
(ii) The
execution, delivery and performance by such Guarantor of this Guaranty and each other Transaction Document to which such Guarantor is
a party (A) have been duly authorized by all necessary corporate, limited liability company or limited partnership action, (B) do not
and will not contravene its charter, articles, certificate of formation or by-laws, its limited liability company or operating agreement
or its certificate of partnership or partnership agreement, as applicable, or any applicable law or any contractual restriction binding
on such Guarantor or its properties do not and will not result in or require the creation of any lien, security interest or encumbrance
(other than pursuant to any Transaction Document) upon or with respect to any of its properties, and (C) do not and will not result in
any default, noncompliance, suspension, revocation, impairment, forfeiture or nonrenewal of any material permit, license, authorization
or approval applicable to it or its operations or any of its properties.
(iii) No
authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or other Person is required
in connection with the due execution, delivery and performance by such Guarantor of this Guaranty or any of the other Transaction Documents
to which such Guarantor is a party (other than expressly provided for in any of the Transaction Documents).
(iv) This
Guaranty has been duly executed and delivered by each Guarantor and is, and each of the other Transaction Documents to which such Guarantor
is or will be a party, when executed and delivered, will be, a legal, valid and binding obligation of such Guarantor, enforceable against
such Guarantor in accordance with its terms, except as may be limited by the Bankruptcy Code or other applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance, suretyship or similar laws and equitable principles (regardless of whether enforcement
is sought in equity or at law).
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(v) Except
as disclosed in the SEC Documents (as defined in the Securities Purchase Agreement), there is no pending or, to the best knowledge of
such Guarantor, threatened action, suit or proceeding against such Guarantor or to which any of the properties of such Guarantor is subject,
before any court or other Governmental Authority or any arbitrator that (A) if adversely determined, could reasonably be expected to have
a Material Adverse Effect or (B) relates to this Guaranty or any of the other Transaction Documents to which such Guarantor is a party
or any transaction contemplated hereby or thereby.
(vi) Such
Guarantor (A) has read and understands the terms and conditions of the Securities Purchase Agreement, the Security Agreement and the other
Transaction Documents, and (B) now has and will continue to have independent means of obtaining information concerning the affairs, financial
condition and business of the Company and the other Transaction Parties, and has no need of, or right to obtain from the Collateral Agent
or any Buyer, any credit or other information concerning the affairs, financial condition or business of the Company or the other Transaction
Parties.
(vii) There
are no conditions precedent to the effectiveness of this Guaranty that have not been satisfied or waived.
(b) Each
Guarantor covenants and agrees that until Payment in Full of the Guaranteed Obligations, it will comply with each of the covenants (except
to the extent applicable only to a public company) which are set forth in the Security Agreement and Section 4 of the Securities Purchase
Agreement as if such Guarantor were a party thereto.
SECTION 7. Right of Set-off.
Upon the occurrence and during the continuance of any Event of Default, the Collateral Agent and any Buyer may, and is hereby authorized
to, at any time and from time to time, without notice to the Guarantors (any such notice being expressly waived by each Guarantor) and
to the fullest extent permitted by law, set-off and apply any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by the Collateral Agent or any Buyer to or for the credit or the account of
any Guarantor against any and all obligations of the Guarantors now or hereafter existing under this Guaranty or any other Transaction
Document, irrespective of whether or not the Collateral Agent or any Buyer shall have made any demand under this Guaranty or any other
Transaction Document and although such obligations may be contingent or unmatured. The Collateral Agent and each Buyer agrees to notify
the relevant Guarantor promptly after any such set-off and application made by the Collateral Agent or such Buyer, provided that the failure
to give such notice shall not affect the validity of such set-off and application. The rights of the Collateral Agent or any Buyer under
this Section 7 are in addition to other rights and remedies (including, without limitation, other rights of set-off) which the Collateral
Agent or such Buyer may have under this Guaranty or any other Transaction Document or in law or otherwise.
SECTION 8. Limitation on
Guaranteed Obligations.
(a) Notwithstanding
any provision herein contained to the contrary, each Guarantor’s liability hereunder shall be limited to an amount not to exceed
as of any date of determination the greater of:
(i) the
amount of all Guaranteed Obligations, plus interest thereon at the applicable Interest Rate as specified in the Note; and
(ii) the
amount which could be claimed by the Collateral Agent from such Guarantor under this Guaranty without rendering such claim voidable or
avoidable under the Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance Act or
similar statute or common law after taking into account, among other things, such Guarantor’s right of contribution and indemnification.
(b) Each
Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guaranty hereunder or affecting the rights and remedies of the Collateral Agent or any Buyer hereunder
or under applicable law.
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(c) No
payment made by the Company, any Guarantor, any other guarantor or any other Person or received or collected by the Collateral Agent or
any other Buyer from the Company, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations
shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any
such payment (other than any payment made by such Guarantor in respect of the Guaranteed Obligations or any payment received or collected
from such Guarantor in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations up to the maximum liability
of such Guarantor hereunder until after all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have
been Paid in Full.
SECTION 9. Notices, Etc.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Guaranty must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and kept on file by the sending party); (iii) upon receipt, when
sent by email (provided a “read receipt” is obtained and kept on file by the sending party), or (iv) one (1) Business Day
after deposit with a nationally recognized overnight courier service with next day delivery specified, in each case, properly addressed
to the party to receive the same. All notices and other communications provided for hereunder shall be sent, if to any Guarantor, to the
Company’s address, email address and/or facsimile number as set forth in Section 9(f) of the Securities Purchase Agreement, if to
any Buyer, to it at its respective address, email address and/or facsimile number, as set forth in Section 9(f) of the Securities Purchase
Agreement, or if to Collateral Agent, to it at its respective address, email address and/or facsimile number as set forth on its signature
page hereto.
SECTION 10. Governing Law;
Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Guaranty shall be governed
by the internal laws of the State of New York, without giving effect to any choice of law or conflict of law provision or rule (whether
of the State of New York or any other jurisdictions) that would cause the application of the laws of any jurisdiction other than the State
of New York. Each Guarantor hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in The City
of New York, Borough of Manhattan, for the adjudication of any dispute hereunder or in connection herewith or under any of the other Transaction
Documents or with any transaction contemplated hereby or thereby, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim, obligation or defense that it is not personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each
party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address for such notices to it under Section 9(f) of the Securities Purchase Agreement
(or in the case of the Collateral Agent, on its signature page hereto) and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Nothing contained herein shall be deemed or operate to preclude the Collateral Agent or the Buyers from bringing
suit or taking other legal action against any Guarantor in any other jurisdiction to collect on a Guarantor’s obligations or to
enforce a judgment or other court ruling in favor of the Collateral Agent or a Buyer.
SECTION 11. WAIVER OF JURY
TRIAL, ETC. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT OR IN CONNECTION WITH OR ARISING OUT OF THIS GUARANTY, ANY OTHER TRANSACTION
DOCUMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY.
SECTION 12. Taxes.
(a) All
payments made by any Guarantor hereunder or under any other Transaction Document shall be made in accordance with the terms of the respective
Transaction Document and shall be made without set-off, counterclaim, withholding, deduction or other defense. Without limiting the foregoing,
all such payments shall be made free and clear of and without deduction or withholding for any present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes imposed on the net income of the Collateral
Agent or any Buyer by the jurisdiction in which the Collateral Agent or such Buyer is organized or where it has its principal lending
office (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities, collectively or individually,
“Taxes”). If any Guarantor shall be required to deduct or to withhold any Taxes from or in respect of any amount payable
hereunder or under any other Transaction Document:
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(i) the
amount so payable shall be increased to the extent necessary so that after making all required deductions and withholdings (including
Taxes on amounts payable to the Collateral Agent or any Buyer pursuant to this sentence) the Collateral Agent or each Buyer receives an
amount equal to the sum it would have received had no such deduction or withholding been made,
(ii) such
Guarantor shall make such deduction or withholding,
(iii) such
Guarantor shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law, and
(iv) as
promptly as possible thereafter, such Guarantor shall send the Collateral Agent or each Buyer an official receipt (or, if an official
receipt is not available, such other documentation as shall be satisfactory to the Collateral Agent or each Buyer, as the case may be)
showing payment. In addition, each Guarantor agrees to pay any present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made hereunder or from the execution, delivery, registration or enforcement
of, or otherwise with respect to, this Guaranty or any other Transaction Document (collectively, “Other Taxes”).
(b) Each
Guarantor hereby indemnifies and agrees to hold each Indemnified Party harmless from and against Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this Section 12) paid by any Indemnified Party
as a result of any payment made hereunder or from the execution, delivery, registration or enforcement of, or otherwise with respect to,
this Guaranty or any other Transaction Document, and any liability (including penalties, interest and expenses for nonpayment, late payment
or otherwise) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted.
This indemnification shall be paid within thirty (30) days from the date on which the Collateral Agent or such Buyer makes written demand
therefor, which demand shall identify the nature and amount of such Taxes or Other Taxes.
(c) If
any Guarantor fails to perform any of its obligations under this Section 12, such Guarantor shall indemnify the Collateral Agent and each
Buyer for any taxes, interest or penalties that may become payable as a result of any such failure. The obligations of the Guarantors
under this Section 12 shall survive the termination of this Guaranty and the payment of the Obligations and all other amounts payable
hereunder.
SECTION 13. Indemnification.
(a) Without
limitation of any other obligations of any Guarantor or remedies of the Collateral Agent or the Buyers under this Guaranty or applicable
law, except to the extent resulting from such Indemnified Party’s gross negligence or willful misconduct, as determined by a final
judgment of a court of competent jurisdiction no longer subject to appeal, each Guarantor shall, to the fullest extent permitted by law,
indemnify, defend and save and hold harmless the Collateral Agent and each Buyer and each of their affiliates and their respective officers,
directors, employees, agents and advisors (each, an “Indemnified Party”) from and against, and shall pay on demand,
any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel)
that may be incurred by or asserted or awarded against any Indemnified Party in connection with or as a result of any failure of any Guaranteed
Obligations to be the legal, valid and binding obligations of any Transaction Party enforceable against such Transaction Party in accordance
with their terms.
(b) Each
Guarantor hereby also agrees that none of the Indemnified Parties shall have any liability (whether direct or indirect, in contract, tort
or otherwise) or any fiduciary duty or obligation to any of the Guarantors or any of their respective affiliates or any of their respective
officers, directors, employees, agents and advisors, and each Guarantor hereby agrees not to assert any claim against any Indemnified
Party on any theory of liability, for special, indirect, consequential, incidental or punitive damages arising out of or otherwise relating
to the facilities, the actual or proposed use of the proceeds of the advances, the Transaction Documents, or any of the transactions contemplated
by the Transaction Documents.
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SECTION 14. Miscellaneous.
(a) Each
Guarantor will make each payment hereunder in lawful money of the United States of America and in immediately available funds to the Collateral
Agent or each Buyer, at such address specified by the Collateral Agent or such Buyer from time to time by notice to the Guarantors.
(b) No
amendment or waiver of any provision of this Guaranty and no consent to any departure by any Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by each Guarantor and the Collateral Agent, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for which given.
(c) No
failure on the part of the Collateral Agent or any Buyer to exercise, and no delay in exercising, any right or remedy hereunder or under
any other Transaction Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder or under
any Transaction Document preclude any other or further exercise thereof or the exercise of any other right or remedy. The rights and remedies
of the Collateral Agent and the Buyers provided herein and in the other Transaction Documents are cumulative and are in addition to, and
not exclusive of, any rights or remedies provided by any applicable law. The rights and remedies of the Collateral Agent and the Buyers
under any Transaction Document against any party thereto are not conditional or contingent on any attempt by the Collateral Agent or any
Buyer to exercise any of their respective rights or remedies under any other Transaction Document against such party or against any other
Person.
(d) Any
provision of this Guaranty that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability
of such provision in any other jurisdiction.
(e) This
Guaranty is a continuing guaranty and shall (i) remain in full force and effect until Payment in Full of the Guaranteed Obligations (other
than inchoate indemnity obligations) and shall not terminate for any reason prior to the respective Maturity Date of each Note (other
than Payment in Full of the Guaranteed Obligations) and (ii) be binding upon each Guarantor and its respective successors and assigns.
This Guaranty shall inure, together with all rights and remedies of the Collateral Agent and each Buyer hereunder, to the benefit of and
be enforceable by the Collateral Agent, the Buyers, and their respective successors, and permitted pledgees, transferees and assigns.
Without limiting the generality of the foregoing sentence, the Collateral Agent or any Buyer may pledge, assign or otherwise transfer
all or any portion of its rights and obligations under and subject to the terms of the Securities Purchase Agreement, the Security Agreement
or any other Transaction Document to any other Person in accordance with the terms thereof, and such other Person shall thereupon become
vested with all the benefits in respect thereof granted to the Collateral Agent or such Buyer (as applicable) herein or otherwise, in
each case as provided in the Securities Purchase Agreement, the Security Agreement or such Transaction Document. None of the rights or
obligations of any Guarantor hereunder may be assigned or otherwise transferred without the prior written consent of the Collateral Agent.
(f) This
Guaranty and the other Transaction Documents reflect the entire understanding of the transaction contemplated hereby and shall not be
contradicted or qualified by any other agreement, oral or written, entered into before the date hereof.
(g) Section
headings herein are included for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose.
SECTION 15. Currency Indemnity.
If, for the purpose of obtaining
or enforcing judgment against Guarantor in any court in any jurisdiction, it becomes necessary to convert into any other currency (such
other currency being hereinafter in this Section 15 referred to as the “Judgment Currency”) an amount due under this
Guaranty in any currency (the “Obligation Currency”) other than the Judgment Currency, the conversion shall be made
at the rate of exchange prevailing on the Business Day immediately preceding (a) the date of actual payment of the amount due, in the
case of any proceeding in the courts of courts of the jurisdiction that will give effect to such conversion being made on such date, or
(b) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the applicable date
as of which such conversion is made pursuant to this Section 15 being hereinafter in this Section 15 referred to as the “Judgment
Conversion Date”).
9
If, in the case of any proceeding
in the court of any jurisdiction referred to in the preceding paragraph, there is a change in the rate of exchange prevailing between
the Judgment Conversion Date and the date of actual receipt of the amount due in immediately available funds, the Guarantors shall pay
such additional amount (if any, but in any event not a lesser amount) as may be necessary to ensure that the amount actually received
in the Judgment Currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of the Obligation
Currency which could have been purchased with the amount of the Judgment Currency stipulated in the judgment or judicial order at the
rate of exchange prevailing on the Judgment Conversion Date. Any amount due from the Guarantors under this Section 15 shall be due as
a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Guaranty.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
10
IN WITNESS WHEREOF, each Guarantor
has caused this Guaranty to be executed by its respective duly authorized officer, as of the date first above written.
GUARANTOR(S):
[_____________],
a [___________]
By:
Name:
Title:
[_____________],
a [___________]
By:
Name:
Title:
[Signature
Page to Guaranty]
ACCEPTED BY:
[•],
as Collateral Agent
By:
Name:
Title:
Address for notices:
[•]
Attention: [•]
Email: [•]
[Signature
Page to Guaranty]
EX-10.6 — EXHIBIT 10.6
EX-10.6
Filename: e7788_ex10-6.htm · Sequence: 10
EXHIBIT 10.6
EQUITY PURCHASE
FACILITY AGREEMENT
THIS EQUITY PURCHASE FACILITY
AGREEMENT (this “Agreement”), dated as of July 16, 2026, is made by and between [•], a Delaware limited
liability company, or its registered assigns (the “Investor”) and Sadot Group Inc., a Nevada corporation (the “Company”).
The Investor and the Company may be referred to herein individually as a “Party” and collectively as the “Parties.”
WHEREAS, the Parties desire
that, upon the terms and subject to the conditions contained herein, the Company shall have the right to issue and sell to the Investor,
from time to time as provided herein, and the Investor shall purchase from the Company, up to an aggregate of $100.0 million (the “Commitment
Amount”) in newly issued shares of common stock of the Company, par value $0.0001 per share (the “Common Shares”);
WHEREAS, the Common Shares
are listed on the Nasdaq Capital Market under the symbol “SDOT”;
WHEREAS, the offer and
sale of the Common Shares issuable hereunder will be made in reliance upon Section 4(a)(2) under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the “Securities Act”), or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect to any or all of the transactions to be made hereunder;
and
WHEREAS, the Parties are
concurrently entering into a Registration Rights Agreement in the form attached as Exhibit A hereto (the “Registration
Rights Agreement”), pursuant to which the Company shall register the resale of the Registrable Securities (as defined in the
Registration Rights Agreement), upon the terms and subject to the conditions set forth therein.
NOW, THEREFORE,
the Parties hereto agree as follows:
Article I. Certain Definitions
Section 1.01. For purposes of
this Agreement, capitalized terms not otherwise defined in this Agreement shall have the respective meanings indicated below, such meanings
to be applicable equally to both the singular and plural forms of such terms:
(a) “Accredited
Investor” shall have the meaning set forth in Section 3.05.
(b) “Additional
Issuance Restricted Period” shall mean the period beginning on the date of this Agreement through, and including, two (2) calendar
months after a Lapsed Registration Termination or any termination pursuant to Section 9.01(b).
(c) “Adjusted
Advance Amount” shall have the meaning set forth in Section 2.02(f).
(d) “Advance”
shall mean any issuance and sale of Advance Shares by the Company to the Investor pursuant to this Agreement.
(e) “Advance
Date” means the first Trading Day immediately after the expiration of the applicable Pricing Period for each Advance.
(f) “Advance
Halt” means, on any day during the Pricing Period (i) the Company notifies the Investor that a Material Outside Event has occurred
or shall have occurred, (ii) the Company notifies the Investor of a Black Out Period, or (iii) the Investor learns that an Equity Condition
Failure exists.
(g) “Advance
Notice” shall mean a written notice in the form of Exhibit B attached hereto to the Investor executed by an officer of
the Company and setting forth the number of Advance Shares that the Company desires to issue and sell to the Investor.
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(h) “Advance
Notice Confirmation” means, in connection with an Advance Notice selecting either an Accelerated Purchase Pricing Period, an
Extended Purchase Pricing Period or an Overtime Purchase Pricing Period, written confirmation by the Investor to the Company (which may
be delivered by e-mail), at the Investor’s discretion, accepting such Advance Notice, subject to the terms and adjustments herein,
and, where applicable, specifying the time the Pricing Period begins (at Investor’s discretion) for such Advance Notice.
(i) “Advance
Notice Date” means each date the Company is deemed to have delivered (in accordance with Section 2.01(b) of this Agreement)
an Advance Notice to the Investor, subject to the terms of this Agreement.
(j) “Advance
Shares” shall mean the Common Shares that the Company shall issue and sell to the Investor pursuant to the terms of this Agreement.
(k) “Affiliate”
shall have the meaning set forth in Section 3.07.
(l) “After
Market Trading Day” means a Trading Day during which the close of Regular Trading Hours on the Principal Market ends at 4:00
p.m. New York City time and trading on the Principal Market continues after the close of the Principal Market until 8:00 p.m. New York
City time in the form of after-market trading.
(m) “After
Market Notice Hours” means, on an After Market Trading Day, the period of time from 4:00 p.m. New York City time until 7:30
p.m. New York City time.
(n) “After
Market Trading Hours” means, on an After Market Trading Day, the period of time from 4:00 p.m. New York City time until 8:00
p.m. New York City time.
(o) “After
Market Pricing Hours” means the trading hours during any Trading Day that the Principal Market is open, beginning at the start
of Regular Trading Hours on such Trading Day and ending at the conclusion of the After Market Trading Hours on such Trading Day.
(p) “Aggregate
Purchase Price” means the product of (i) the Purchase Price and (ii) the Adjusted Advance Amount.
(q) “Agreement”
shall have the meaning set forth in the preamble of this Agreement.
(r) “Applicable
Laws” shall mean all applicable laws, statutes, rules, regulations, orders, executive orders, directives, policies, guidelines
and codes having the force of law, whether local, national, or international, as amended from time to time, including without limitation
(i) all applicable laws that relate to money laundering, terrorist financing, financial record keeping and reporting, (ii) all applicable
laws that relate to anti-bribery, anti-corruption, books and records and internal controls, including the United States Foreign Corrupt
Practices Act of 1977, and (iii) any Sanctions laws.
(s) “Applicable
VWAP” means the Daily VWAP, Extended Daily VWAP, Hourly VWAP, Extended Hourly VWAP or Overtime VWAP, as applicable.
(t) “Approved
Stock Plan” means any employee benefit plan which has been approved by the board of directors of the Company prior to or subsequent
to the date hereof pursuant to which Common Shares and standard options to purchase Common Shares may be issued to any employee, officer
or director for services provided to the Company in their capacity as such.
(u) “Bankruptcy
Law” means Title 11, U.S. Code, or any similar federal, state or similar laws for the relief of debtors.
(v) “Black
Out Period” shall have the meaning set forth in Section 6.04(a).
(w) “Block
Trades” means any privately negotiated transaction involving the sale or resale of Common Shares, executed outside of the public
exchange (including trades executed through alternative trading systems, dark pools, or direct negotiation), involving at least 10,000
Common Shares, including trades where a broker-dealer attempts to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction. Such trades may be conducted without substantial marketing efforts prior to pricing
and may include same-day trades, overnight trades or similar transactions.
2
(x) “Bona
Fide Offer” shall have the meaning set forth in Section 6.22.
(y) “Closing”
shall have the meaning set forth in Section 2.04.
(z) “Commitment
Amount” shall have the meaning set forth in the recitals of this Agreement.
(aa) “Commitment Period”
shall mean the period commencing on the date of this Agreement and expiring upon the date of termination of this Agreement in accordance
with Section 9.01.
(bb) “Commitment Fee”
shall have the meaning set forth in Section 11.04.
(cc) “Commitment Shares”
shall have the meaning set forth in Section 4.3611.04.
(dd) “Common Share
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any
time Common Shares, including, without limitation, any debt, preferred shares, right, option, warrant or other instrument that is at any
time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Shares.
(ee) “Common Shares”
shall have the meaning set forth in the recitals of this Agreement.
(ff) “Company”
shall have the meaning set forth in the preamble of this Agreement.
(gg) “Company Charter”
means the Articles of Incorporation, as amended, of the Company as in effect on the date hereof and as may be amended from time to time.
(hh) “Company Indemnitees”
shall have the meaning set forth in Section 5.02.
(ii) “Condition
Satisfaction Date” shall have the meaning set forth in Annex I.
(jj) “Confirmation
Deadline” means, in connection with (i) an Advance Notice selecting an Accelerated Purchase Pricing Period or Extended Purchase
Pricing Period, 4:00 p.m. New York City time (or the conclusion of Regular Trading Hours on the Principal Market, if earlier) on the Trading
Day of the applicable Pricing Period, and (ii) an Advance Notice selecting an Overtime Purchase Pricing Period, 8:00 p.m. New York City
time on the After Market Trading Day of the applicable Pricing Period.
(kk) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary
effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with
respect thereto.
(ll) “Convertible
Securities” shall mean any shares of capital stock or other security of the Company or any of its Subsidiaries that is at any
time and under any circumstances directly or indirectly convertible into, exercisable or exchangeable for, or which otherwise entitles
the holder thereof to acquire, any shares of capital stock or other security of the Company (including, without limitation, Common Shares)
or any of its Subsidiaries.
(mm) “Current Report”
shall have the meaning set forth in Section 6.15.
3
(nn) “Custodian”
means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.
(oo) “Daily
Traded Amount” means the daily trading volume of the Common Shares on the Principal Market during Regular Trading Hours as reported
by the Reporting Service.
(pp) “Daily VWAP”
means, for any Trading Day, the VWAP for such Trading Day during Regular Trading Hours as reported by the Reporting Service. All such
determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar
transaction during such period.
(qq) “Disclosure Schedules”
shall have the meaning set forth in Article IV.
(rr) “Effective Date”
means the first Trading Day immediately following the date hereof.
(ss) “Eligible Advance
Notice” means an Advance Notice (i) properly delivered by the Company in accordance, and in compliance, with the applicable
terms and conditions of this Agreement, and (ii) where the delivery of such Advance Notice will not cause, on any given Trading Day, a
Pricing Period related to such Advance Notice to overlap with a Pricing Period in effect with respect to a different Advance Notice. (For
avoidance of doubt, the Pricing Period of only one Advance Notice may be in effect on the same Trading Day and, therefore, any additional
Advance Notice that would cause overlapping Pricing Periods on a given Trading Day shall not be deemed an Eligible Advance Notice).
(tt) “Environmental
Laws” shall have the meaning set forth in Section 4.14.
(uu) “Equity Condition
Failure” means a Trading Day during a Pricing Period on which (A) the Company or any of its respective directors, officers,
employees or agents has disclosed any material non-public information about the Company to the Investor (unless a public announcement
thereof is made by the Company in the manner contemplated by Regulation FD prior to the opening of trading on the Principal Market), or
(B) any of the conditions set forth in subparagraphs (b), (c), (f), (h), (i), (n), (o), or (p) to Annex I to this Agreement are
not satisfied.
(vv) “Exchange Act”
means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(ww) “Exchange Cap”
shall have the meaning set forth in Section 2.02(c).
(xx) “Excluded
Day” means a day on which there is no VWAP for the Common Shares.
(yy) “Excluded Securities”
means (i) Common Shares or options to purchase Common Shares issued to directors, officers or employees of the Company for services rendered
to the Company in their capacity as such pursuant to an Approved Stock Plan, provided that (A) all such issuances (taking into account
the Common Shares issuable upon exercise of such options) after the date of this Agreement pursuant to this clause (i) do not, in the
aggregate, exceed more than 5% of the Common Shares issued and outstanding immediately prior to the date thereof and (B) the exercise
price of any such options is not lowered, none of such options are amended to increase the number of shares issuable thereunder and none
of the terms or conditions of any such options are otherwise materially changed in any manner that adversely affects the Investor; (ii)
Common Shares issued upon the conversion or exercise of Convertible Securities (other than options to purchase Common Shares issued pursuant
to an Approved Stock Plan that are covered by clause (i) above) issued prior to the date of this Agreement, provided that the conversion,
exercise or other method of issuance (as the case may be) of any such Convertible Security is made solely pursuant to the conversion,
exercise or other method of issuance (as the case may be) provisions of such Convertible Security that were in effect on the date immediately
prior to the date of this Agreement, the conversion, exercise or issuance price of any such Convertible Securities (other than options
to purchase Common Shares issued pursuant to an Approved Stock Plan that are covered by clause (i) above) is not lowered, none of such
Convertible Securities (other than standard options to purchase Common Shares issued pursuant to an Approved Stock Plan that are covered
by clause (i) above) are amended to increase the number of shares issuable thereunder and none of the terms or conditions of any such
Convertible Securities (other than options to purchase Common Shares issued pursuant to an Approved Stock Plan that are covered by clause
(i) above) are otherwise materially changed in any manner that adversely affects the Investor; and (iii) any Common Shares issued or issuable
in connection with any acquisitions (whether by merger, consolidation, purchase of equity, purchase of assets, reorganization or otherwise),
mergers, consolidations, or reorganizations approved by a majority of the disinterested directors of the Company, provided that any such
issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company
or an owner of an asset in a business complementary with the business of the Company and shall provide to the Company additional benefits
in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the
purpose of raising capital or to an entity whose primary business is investing in securities, provided that such securities are issued
as “restricted securities” (as defined in Rule 144) and carry no registration rights that require or permit the filing of
any registration statement in connection therewith.
4
(zz) “Extended Daily
VWAP” means, for any Trading Day, the Extended VWAP for such Trading Day during Extended Trading Hours as reported by the Reporting
Service. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization
or other similar transaction during such period.
(aaa) “Extended Hourly
VWAP” means, for any Trading Day, the Extended VWAP during any given one-hour interval beginning at 4:00 a.m. New York City
time through 4:00 p.m. New York City time, as reported by the Reporting Service. In the event that for the relevant Pricing Period, the
Extended Trading Hours results in a fractional hour, then the last fractional hour of trading of the Extended Trading Hours on such Trading
Day will count as the final “one-hour” interval of such Trading Day. All such determinations shall be appropriately adjusted
for any stock dividend, stock split, stock combination, recapitalization or other similar transaction during such period.
(bbb) “Extended Trading
Hours” means the trading hours during any Trading Day that the Principal Market is open, beginning at 4:00 a.m. New York City
time and ending 4:00 p.m. New York City time (or at the time the Principal Market closes, if earlier) on such Trading Day. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction
during such period.
(ccc) “Extended VWAP”
means, for any Trading Day that the Common Shares is then listed or quoted on a Principal Market, the volume weighted average price of
the Common Shares for the applicable measurement period on the Principal Market during the Extended Trading Hours on such Trading Day
as reported by the Reporting Service. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such measurement period.
(ddd) “GAAP”
shall have the meaning set forth in Section 4.07.
(eee) “GDPR”
shall have the meaning set forth in Section 4.36.
(fff) “Hazardous Materials”
shall have the meaning set forth in Section 4.14.
(ggg) “HIPAA”
shall have the meaning set forth in Section 4.36.
(hhh) “Hourly VWAP”
means, for any Trading Day, the VWAP during any given one-hour interval beginning at 9:30 a.m. New York City time through 4:00 p.m. New
York City time (or the close of trading on the Principal Market, if earlier), as reported by the Reporting Service. The last 30 minutes
(or fraction of an hour) of the Regular Trading Hours of such Trading Day will count as the final “one-hour” interval of such
Trading Day.
(iii) “Indebtedness”
means (i) all indebtedness for borrowed money, (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property
or services (including, without limitation, “capital leases” in accordance with GAAP) (other than trade payables entered into
in the ordinary course of business consistent with past practice), (iii) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (iv) all obligations evidenced by notes, bonds, debentures or similar instruments,
including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (v) all indebtedness
created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under
such agreement in the event of default are limited to repossession or sale of such property), (vi) all monetary obligations under any
leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as
a capital lease, (vii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any lien upon or in any property or assets (including accounts and contract
rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment
of such indebtedness, and (viii) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred
to in clauses (i) through (vii) above.
(jjj) “Indemnified
Liabilities” shall have the meaning set forth in Section 5.01.
5
(kkk) “Insolvent”
shall mean, whether on a consolidated or individual basis, (i) the Company and its Subsidiaries are unable to pay their debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (ii) the present fair saleable value
of the Company’s and its Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’
total Indebtedness or (iii) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would be beyond
their ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has engaged in any business or in any transaction,
and is not about to engage in any business or in any transaction, for which the Company’s or such Subsidiary’s remaining assets
constitute unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and
is proposed to be conducted.
(lll) “Investor”
shall have the meaning set forth in the preamble of this Agreement.
(mmm) “Investor Indemnitees”
shall have the meaning set forth Section 5.01.
(nnn) “IT Systems”
shall have the meaning set forth in Section 4.36.
(ooo) “Lapsed
Registration Termination” shall have the meaning set forth in 9.01(a).
(ppp) “Limitation
Date” shall have the meaning set forth in Section 6.21(b)(i).
(qqq) “Market Price”
shall mean the Accelerated Purchase Market Price, Regular Purchase Market Price, Extended Purchase Market Price or Overtime Purchase Market
Price, as applicable (in each case, to be appropriately adjusted for any reorganization, recapitalization, non-cash dividend, stock split
or other similar transaction that occurs on or after the date of the Original Agreement):
(i) “Accelerated
Purchase Market Price” for an Accelerated Purchase Pricing Period, the lower of (i) the lowest price the Common Shares traded
during the Regular Trading Hours of the Trading Day applicable to the Accelerated Purchase Pricing Period and (ii) the lowest Hourly VWAP
of the Common Shares during the Regular Trading Hours of the Trading Day applicable to the Accelerated Purchase Pricing Period;
(ii) “Regular
Purchase Market Price” for a Regular Purchase Pricing Period the lower of (A) the lowest price the Common Shares traded during
the Regular Trading Hours During Pricing Period applicable to the Pricing Period and (B) the lowest Hourly VWAP of the Common Shares during
the Regular Trading Hours During Pricing Period applicable to the Pricing Period. (For avoidance of doubt, the Regular Purchase Market
Price includes any Excluded Day(s) during the relevant Pricing Period);
(iii) “Extended
Purchase Market Price” for an Extended Purchase Pricing Period, the lower of (i) the lowest price the Common Shares traded during
the Extended Trading Hours on the Trading Day applicable to the Extended Purchase Pricing Period and (ii) the lowest Extended Hourly VWAP
of the Common Shares during the Trading Day applicable to the Extended Purchase Pricing Period; and
(iv) “Overtime
Purchase Market Price” for an Overtime Purchase Pricing Period, the lower of (i) the lowest price the Common Shares traded during
the After Market Pricing Hours on the Trading Day applicable to the Overtime Purchase Pricing Period and (ii) the lowest Overtime Hourly
VWAP of the Common Shares during the Trading Day applicable to the Overtime Purchase Pricing Period.
(rrr) “Material Adverse
Effect” means any material adverse effect on (i) the business, properties, assets, liabilities, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the
transactions contemplated hereby or in any of the other Transaction Documents or any other agreements or instruments to be entered into
in connection herewith or therewith or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of their
respective obligations under any of the Transaction Documents.
(sss) “Material Outside
Event” shall have the meaning set forth Section 6.11.
6
(ttt) “Maximum Advance
Amount” means the Accelerated Purchase Maximum Advance Amount, Regular Purchase Maximum Advance Amount or Extended Purchase
Maximum Advance Amount, as applicable, provided, however, notwithstanding anything herein to the contrary, the Maximum Advance
Amount shall not exceed the limitations set forth in Section 2.02 of this Agreement:
(i) “Accelerated
Purchase Maximum Advance Amount” in respect of each Advance Notice with an Accelerated Purchase Pricing Period, an amount of
Common Shares equal to the lower of (i) four hundred percent (400%) of the median Daily Traded Amount during the ten (10) consecutive
Trading Days immediately preceding an Advance Notice Date, and (ii) such number of Common Shares equal to $2,500,000 as of the date of
each Advance Notice (determined based on the last closing price of the Common Shares on the Principal Market prior to delivery of such
Advance Notice), or such other amount of Common Shares as agreed upon by the Parties in writing, which may be made via e-mail;
(ii) “Regular
Purchase Maximum Advance Amount” in respect of each Advance Notice with a Regular Purchase Pricing Period, an amount of Common
Shares equal to the lower of (i) one hundred percent (100%) the median Daily Traded Amount during the ten (10) consecutive Trading Days
immediately preceding an Advance Notice Date, and (ii) such number of Common Shares equal to $1,000,000 as of the date of each Advance
Notice (determined based on the last closing price of the Common Shares on the Principal Market prior to delivery of such Advance Notice);
(iii) “Extended
Purchase Maximum Advance Amount” in respect of each Advance Notice with an Extended Purchase Pricing Period, an amount of Common
Shares equal to the lower of (i) four hundred percent (400%) of the median Daily Traded Amount during the ten (10) consecutive Trading
Days immediately preceding an Advance Notice Date, and (ii) such number of Common Shares equal to $2,500,000 as of the date of each Advance
Notice (determined based on the last closing price of the Common Shares on the Principal Market prior to delivery of such Advance Notice),
or such other amount of Common Shares as agreed upon by the Parties in writing, which may be made via e-mail; and
(iv) “Overtime
Purchase Maximum Advance Amount” in respect of each Advance Notice with an Overtime Purchase Pricing Period, an amount of Common
Shares equal to the lower of (i) four hundred percent (400%) of the median Daily Traded Amount during the ten (10) consecutive Trading
Days immediately preceding an Advance Notice Date, and (ii) such number of Common Shares equal to $2,500,000 as of the date of each Advance
Notice (determined based on the last closing price of the Common Shares on the Principal Market prior to delivery of such Advance Notice),
or such other amount of Common Shares as agreed upon by the Parties in writing, which may be made via e-mail.
(uuu) “Money Laundering
Laws” shall have the meaning set forth in Section 4.32.
(vvv) “OFAC”
shall have the meaning set forth in Section 4.31.
(www) “Offer Notice”
shall have the meaning set forth in Section 6.22.
(xxx) “Ownership
Limitation” shall have the meaning set forth in Section 2.02(a).
(yyy) “Overtime Daily
VWAP” means, for any After Market Trading Day, the Overtime VWAP for such After Market Trading Day during the After Market Trading
Hours, starting at the beginning of the Overtime Purchase Pricing Period and ending at 8:00 p.m., as reported by the Reporting Service.
All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other
similar transaction during such period.
7
(zzz) “Overtime Hourly
VWAP” means, for any Trading Day, the Overtime VWAP during any given one-hour interval beginning at the start of Regular Trading
Hours through the conclusion of After Market Trading Hours, as reported by the Reporting Service. In the event that, for the relevant
Pricing Period, the After Market Pricing Hours results in a fractional hour, then the last fractional hour of trading of the After Market
Pricing Hours on such Trading Day will count as the final “one-hour” interval of such Trading Day. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction
during such period.
(aaaa) “Overtime VWAP”
means, for any After Market Trading Day, the volume weighted average price of the Common Shares on the Principal Market during the After
Market Pricing Hours as reported by the Reporting Service for the applicable measurement period but in no event after the conclusion of
the After Market Trading Hours, provided, however, that for purposes of calculating the volume weighted average price of the Common
Shares, the “Overtime VWAP” shall exclude Block Trades. All such determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination, recapitalization or other similar transaction during such measurement period.
(bbbb) “Party”
and “Parties” shall each have the meaning set forth in the recitals of this Agreement.
(cccc) “Person”
shall mean an individual, a corporation, a partnership, a limited liability company, a trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
(dddd) “Personal Data”
shall have the meaning set forth in Section 4.36.
(eeee) “Plan of Distribution”
shall mean the section of a Registration Statement disclosing the plan of distribution of the Shares.
(ffff) “Pricing Period”
shall mean either the Accelerated Purchase Pricing Period, the Regular Purchase Pricing Period, the Extended Purchase Pricing Period or
the Overtime Purchase Pricing Period, as applicable:
(i) “Accelerated
Purchase Pricing Period” means, with respect to an Advance Notice selecting an Accelerated Purchase Pricing Period, the period
commencing at the Accelerated Deemed Delivered Time (or the start of Regular Trading Hours on the Principal Market on such Trading Day,
if later) and ending at 4:00 p.m. New York City time (or the close of Regular Trading Hours on the Principal Market, if earlier) on the
applicable date of the Accelerated Deemed Delivered Time; provided however, that in the event of an Advance Halt, the Accelerated Purchase
Pricing Period shall expire at the time of such Advance Halt;
(ii) “Regular
Purchase Pricing Period” means, with respect to an Advance Notice selecting a Regular Purchase Pricing Period, the Regular Trading
Hours of the three consecutive Trading Days commencing at the start of Regular Trading Hours on the date of the applicable Deemed Delivered
Time and ending at the close of Regular Trading Hours on the third consecutive Trading Day; provided, however, that in the event of an
Advance Halt, the Regular Purchase Pricing Period shall end at the time of such Advance Halt (for the avoidance of doubt, except where
explicitly stated in this Agreement that Excluded Days shall be excluded, the Regular Purchase Pricing Period shall include any Excluded
Day(s));
(iii) “Extended
Purchase Pricing Period” means, with respect to an Advance Notice selecting an Extended Purchase Pricing Period, the period
commencing at the Extended Deemed Delivered Time and ending at 4:00 p.m. New York City time (or the close of Regular Trading Hours on
the Principal Market, if earlier) on the applicable date of the Extended Deemed Delivered Time; provided however, that in the event of
an Advance Halt, the Extended Purchase Pricing Period shall expire at the time of such Advance Halt; and
(iv) “Overtime
Purchase Pricing Period” means, with respect to an Advance Notice selecting an Overtime Purchase Pricing Period, the period
commencing at the Overtime Deemed Delivered Time and ending at the conclusion of the After Market Pricing Hours on the date of the Deemed
Delivered Time; provided however, that in the event of an Advance Halt, the Overtime Purchase Pricing Period shall expire at the time
of such Advance Halt.
8
(gggg) “Principal
Market” shall mean the Nasdaq Capital Market, provided however, that in the event the Common Shares are ever listed or traded
on any of the Trading Markets, then the “Principal Market” shall mean such Trading Market on which the Common Shares are then
listed or traded to the extent such other market or exchange is the principal trading market or exchange for the Common Shares.
(hhhh) “Prospectus”
shall mean any prospectus (including, without limitation, all amendments and supplements thereto) used by the Company in connection with
a Registration Statement, including documents incorporated by reference therein.
(iiii) “Prospectus
Supplement” shall mean any prospectus supplement to a Prospectus filed with the SEC pursuant to Rule 424(b) under the Securities
Act, including documents incorporated by reference therein.
(jjjj) “Purchase Price”
shall mean the price per Advance Share in respect of any Advance Notice:
(i) For
an Advance Notice selecting an Accelerated Purchase Pricing Period or Extended Purchase Pricing Period, the applicable Market Price multiplied
by ninety-eight percent (98%); provided, however, that, subject to the rules and regulations of the Principal Market, such percentage
may be reduced at any time at the Company’s sole discretion;
(ii) For
an Advance Notice selecting a Regular Purchase Pricing Period, the applicable Regular Purchase Market Price multiplied by ninety-five
percent (95%); provided, however, that, subject to the rules and regulations of the Principal Market, such percentage may be reduced at
any time at the Company’s sole discretion; and
(iii) For
an Advance Notice selecting an Overtime Purchase Pricing Period, the applicable Overtime Purchase Market Price multiplied by ninety-five
percent (95%); provided, however, that, subject to the rules and regulations of the Principal Market, such percentage may be reduced at
any time at the Company’s sole discretion.
(kkkk) “Real Property”
shall mean the real property, leases in real property, facilities or other interests in real property owned or held by the Company or
any of its Subsidiaries.
(llll) “Registrable
Securities” shall have the meaning set forth in the Registration Rights Agreement.
(mmmm) “Registration
Limitation” shall have the meaning set forth in Section 2.02(b).
(nnnn) “Registration
Rights Agreement” shall have the meaning set forth in the recitals of this Agreement.
(oooo) “Registration
Statement” shall have the meaning set forth in the Registration Rights Agreement.
(pppp) “Regular Trading
Hours” means the regular trading hours during any Trading Day that the Principal Market is open, starting 9:30 a.m. New York
City time and ending 4:00 p.m. New York City time (or at the time the Principal Market closes, if earlier) on such Trading Day (for avoidance
of doubt, Regular Trading Hours excludes pre-market and post-market trading).
(qqqq) “Regular Trading
Hours During Pricing Period” means the trading hours during any Trading Day, beginning at the start of the applicable Pricing
Period and ending at the end of the applicable Pricing Period (for the avoidance of doubt, Regular Trading Hours During Regular Pricing
Period shall include pre-market and post-market trading).
(rrrr) “Regulation
D” shall mean the provisions of Regulation D promulgated under the Securities Act.
(ssss) “Reporting
Service” means either Bloomberg L.P. or FactSet Research Systems Inc., as determined by the Investor from time to time.
9
(tttt) “Required Approvals”
shall have the meaning set forth in Section 4.02.
(uuuu) “Reservation
Estimate” shall have the meaning set forth in Section 6.26.
(vvvv) “Restricted
Period” shall have the meaning set forth in Section 6.19.
(wwww) “Restricted
Person” shall have the meaning set forth Section 6.19.
(xxxx) “Rule 144”
shall have the meaning set forth in Section 6.08.
(yyyy) “Sanctions”
shall have the meaning set forth in Section 4.31.
(zzzz) “Sanctioned
Countries” shall have the meaning set forth in Section 4.31.
(aaaaa) “SEC”
shall mean the U.S. Securities and Exchange Commission.
(bbbbb) “SEC Documents”
means (1) any registration statement filed by the Company with the SEC, including the financial statements, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all information deemed to be a part thereof as of the effective date
of such registration statement under the Securities Act, (2) any proxy statement or prospectus filed by the Company with the SEC, including
all documents incorporated or deemed incorporated therein by reference, whether or not included in a registration statement, in the form
in which such proxy statement or prospectus has most recently been filed with the SEC pursuant to Rule 424(b) under the Securities Act,
(3) all reports, periodic reports, schedules, registrations, forms, statements, information and other documents filed with or furnished
to the SEC by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act during the two years prior to the date hereof,
including, without limitation, the Current Report, (4) each Registration Statement, as the same may be amended from time to time, the
Prospectus contained therein and each Prospectus Supplement thereto and (5) all information contained in such filings and all documents
and disclosures that have been and heretofore shall be incorporated by reference therein.
(ccccc) “Securities
Act” shall have the meaning set forth in the recitals of this Agreement.
(ddddd) “Settlement
Document” in respect of an Advance Notice delivered by the Company, shall mean a settlement document in the form set out on
Exhibit C.
(eeeee) “Shares”
means the Common Shares to be issued from time to time hereunder pursuant to an Advance.
(fffff) “Stockholder
Approval” shall have the meaning set forth in Section 6.25.
(ggggg) “Subsequent
Placement” means the issuance, offer, sale, grant any option or right to purchase, or otherwise disposition of (or announcement
of any issuance, offer, sale, grant of any option or right to purchase or other disposition of) any equity security or equity-linked or
related security (including, without limitation, any “equity security” (as that term is defined under Rule 405 promulgated
under the Securities Act)), any Convertible Securities, any debt, any preferred stock or any purchase rights (any such issuance, offer,
sale, grant, disposition or announcement (whether occurring during the Additional Issuance Restricted Period or at any time thereafter)).
(hhhhh) “Subsidiaries”
means any Person in which (I) the accounts of which would be consolidated with those of the Company in the Company’s consolidated
financial statements if such financial statements were prepared in accordance with GAAP or (II) the Company, directly or indirectly, (i)
owns any of the outstanding shares of capital stock or holds any equity or similar interest of such Person or (ii) controls or operates
all or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to herein
as a “Subsidiary”.
(iiiii) “Trading Day”
means any day during which the Principal Market shall be open for business.
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(jjjjj) “Trading Market”
shall mean the New York Stock Exchange, the NYSE American, the Nasdaq Global Select Market, the Nasdaq Global Market, the Nasdaq Capital
Market, or the NYSE Euronext, whichever is at the time the principal trading exchange or market for the Common Shares.
(kkkkk) “Transaction
Documents” means, collectively, this Agreement, the Registration Rights Agreement and each of the other agreements and instruments
entered into or delivered by any of the parties hereto in connection with the transactions contemplated hereby and thereby, as may be
amended from time to time.
(lllll) “Transactions”
shall have the meaning set forth in the recitals.
(mmmmm) “Transfer
Agent” means Computershare, Inc., the current transfer agent of the Company, with a mailing address of 6200 S. Quebec St., Greenwood
Village, Colorado 80111 and a facsimile number of (303) 262-0702, and any successor transfer agent of the Company.
(nnnnn) “Variable
Rate Transaction” means a transaction in which the Company (i) issues or sells any Common Shares or Common Share Equivalents
that are convertible into, exchangeable or exercisable for, or include the right to receive additional Common Shares or Common Share Equivalents
either (A) at a conversion price, exercise price, exchange rate or other price that is based upon and/or varies with the trading prices
of or quotations for the Common Shares at any time after the initial issuance of such equity or debt securities (including, without limitation,
pursuant to any “cashless exercise” provision), or (B) with a conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such equity or debt security or upon the occurrence of specified or contingent
events directly or indirectly related to the business of the Company or the market for the Common Shares (including, without limitation,
any “full ratchet,” “share ratchet,” “price ratchet,” or “weighted average” anti-dilution
provisions, but not including any standard anti-dilution protection for any reorganization, recapitalization, non-cash dividend, share
split, reverse share split or other similar transaction), (ii) issues or sells any equity or debt securities, including without limitation,
Common Shares or Common Share Equivalents, either (A) at a price that is subject to being reset at some future date after the initial
issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the
business of the Company or the market for the Common Shares (other than standard anti-dilution protection for any reorganization, recapitalization,
non- cash dividend, share split, reverse share split or other similar transaction), or (B) that is subject to or contains any put, call,
redemption, buy-back, price- reset or other similar provision or mechanism (including, without limitation, a “Black-Scholes”
put or call right) that provides for the issuance of additional equity securities of the Company or the payment of cash by the Company,
or (iii) enters into any agreement, including, but not limited to, an at-the-market offering or “equity line of credit” (that
is not an Excluded Securities) or other continuous offering or similar offering of Common Shares or Common Share Equivalents whereby the
Company may sell Common Shares or Common Share Equivalents at a future determined price.
(ooooo) “Volume
Limit” means,
(i) For
an Advance Notice selecting either an Accelerated Purchase Pricing Period or Extended Purchase Pricing Period, the trading volume of the
Common Shares on the Principal Market, excluding any Block Trades, during the applicable Pricing Period as reported by the Reporting Service
multiplied by ten percent (10%);
(ii) For
an Advance Notice selecting a Regular Purchase Pricing Period, the trading volume of the Common Shares on the Principal Market, excluding
any Block Trades, during the Regular Trading Hours of such Pricing Period (excluding any applicable Excluded Day(s)) as reported by the
Reporting Service multiplied by ten percent (10%); and
(iii) For
an Advance Notice selecting an Overtime Purchase Pricing Period, the trading volume of the Common Shares on the Principal Market, excluding
any Block Trades, during the applicable Pricing Period as reported by the Reporting Service multiplied by ten percent (10%).
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(ppppp) “Volume Threshold”
means a number of Shares equal to the quotient of (i) the number of Advance Shares requested by the Company in an Advance Notice divided
by (ii) 0.10.
(qqqqq) “Volume Adjusted
Advance Amount” shall have the meaning set forth in Section 2.02(d).
(rrrrr) “Volume Threshold
Failure” shall have the meaning set forth in Section 2.02(d).
(sssss) “VWAP”
means, for any Trading Day that the Common Shares is then listed or quoted on the Principal Market, the volume weighted average price
of the Common Shares for applicable measurement period on the Principal Market during the Regular Trading Hours of the Principal Market
as reported by the Reporting Service. All such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination, recapitalization or other similar transaction during such measurement period.
Article II. Advances
Section 2.01. Advances; Mechanics.
Upon the terms and subject to the conditions of this Agreement, at any time during the Commitment Period, the Company, in its sole discretion,
shall have the right, but not the obligation, to issue and sell to the Investor, and the Investor shall subscribe for and purchase from
the Company, Advance Shares by the delivery to the Investor of Advance Notices, on the following terms:
(a) Advance
Notice. At any time during the Commitment Period the Company may require the Investor to purchase Common Shares by delivering an Advance
Notice to the Investor, subject to the satisfaction or waiver by the Investor of the conditions set forth herein and in Annex I,
and in accordance with the following provisions:
(i) the
Company shall, in its sole discretion, select the number of Advance Shares, not to exceed the Maximum Advance Amount, it desires to issue
and sell to the Investor in each Advance Notice and the time it desires to deliver each Advance Notice;
(ii) there
shall be no mandatory minimum Advances and there shall be no non-usages fee for not utilizing the Commitment Amount or any part thereof;
and
(iii) in
the event that the bid price for the Common Shares is at or below $2.50 (the “Trigger Price”), an Advance Notice shall
not be deemed delivered without the prior written consent of the Investor. Notwithstanding anything to the contrary herein, the Trigger
Price shall not be adjusted for any stock dividend, stock split, stock combination, recapitalization or other similar transaction.
(b) Date
and Time of Delivery of Advance Notice.
(i) Accelerated
Purchase Pricing Period. An Advance Notice sent in accordance with the terms herein and selecting an Accelerated Purchase Pricing
Period shall be deemed delivered if such notice is received by the Investor via e-mail on a Trading Day and the Investor delivers to the
Company an Advance Notice Confirmation for such Advance Notice at the Investor’s discretion and (i) if such Advance Notice is received
by the Investor via e-mail before 9:00 a.m. New York City time on such Trading Day and the Investor delivers to the Company an Advance
Notice Confirmation, such Advance Notice shall be deemed delivered on such Trading Day at the start of the Regular Trading Hours of the
Principal Market on such Trading Day, (ii) if such Advance Notice is received via e-mail after 9:00 a.m. New York City time and before
4:00 p.m. New York City time on such Trading Day and the Investor delivers to the Company an Advance Notice Confirmation, such Advance
Notice shall be deemed delivered on such Trading Day at the time specified by the Investor in the Advance Notice Confirmation, or (iii)
if such notice is received via e-mail after 4:00 p.m. New York City time and the Investor delivers to the Company an Advance Notice Confirmation,
such Advance Notice shall be deemed delivered as of the start of the Regular Trading Hours of the Principal Market on the immediately
succeeding Trading Day (each instance, as applicable, the “Accelerated Deemed Delivered Time”).
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(ii) Regular
Purchase Pricing Period. An Advance Notice sent in accordance with the terms herein and selecting a Regular Purchase Pricing Period
shall be deemed delivered on (i) the Trading Day it is received by the Investor if such notice is received by e-mail at or before 9:00
a.m. New York City time (or at such later time if agreed to by the Investor in its discretion), or (ii) the immediately succeeding Trading
Day if it is received by e-mail after 9:00 a.m. New York City time (each instance, as applicable, the “Regular Deemed Delivered
Time”). In the event that the Company delivers an Advance Notice selecting an (i) Accelerated Purchase Pricing Period or Extended
Purchase Pricing Period on a Trading Day prior to 9:00 a.m. New York City time, or (ii) Overtime Purchase Pricing Period on an After Market
Trading Day during After Market Notice Hours, and in either instance, as applicable, the Investor has not sent an Advance Notice Confirmation
prior to the Confirmation Deadline, the Advance Notice shall be accepted or rescinded as provided in Section 2.01(b)(v).
(iii) Extended
Purchase Pricing Period. An Advance Notice sent in accordance with the terms herein and selecting an Extended Purchase Pricing Period
shall be deemed delivered if such notice is received by the Investor via e-mail on a Trading Day and the Investor delivers to the Company
an Advance Notice Confirmation for such Advance Notice, at the Investor’s discretion and (i) if such Advance Notice is received
by the Investor via e-mail before 4:00 p.m. New York City time on such Trading Day and the Investor delivers to the Company an Advance
Notice Confirmation, such Advance Notice shall be deemed delivered on such Trading Day at the time specified by the Investor in the Advance
Notice Confirmation, or (ii) if such notice is received via e-mail after 4:00 p.m. New York City time, such Advance Notice shall be deemed
delivered on the immediately succeeding Trading Day, at the time specified by the Investor in the Advance Notice Confirmation (each instance,
as applicable, the “Extended Deemed Delivered Time” and, together with the Accelerated Deemed Delivered Time and Regular
Deemed Delivered Time, the “Deemed Delivered Time”). In the event that the Company delivers an Advance Notice selecting
an Extended Purchase Pricing Period on a Trading Day prior to 9:00 a.m. New York City time on a Trading Day, and the Investor has not
sent an Advance Notice Confirmation prior to the Confirmation Deadline, the Advance Notice shall be accepted or rescinded as provided
in the Advance Notice.
(iv) Overtime
Purchase Pricing Period. An Advance Notice sent in accordance with the terms herein and selecting an Overtime Purchase Pricing Period
shall be deemed delivered if such notice is received by the Investor via e-mail on an After Market Trading Day and during the After Market
Notice Hours, and (A) if the Investor delivers to the Company an Advance Notice Confirmation for such Advance Notice, at the Investor’s
discretion, such Advance Notice shall be deemed delivered on such After Market Trading Day at the time specified by the Investor in the
Advance Notice Confirmation (each instance, as applicable, the “Overtime Deemed Delivered Time” and, together with
the Accelerated Deemed Delivered Time, Regular Deemed Delivered Time and Extended Deemed Delivered Time, the “Deemed Delivered
Time”), or (B) if the Investor does not deliver to the Company an Advance Notice Confirmation for such Advance Notice prior
to the Confirmation Deadline, the Advance Notice shall be accepted or rescinded as provided in Section 2.01(b)(v).
(v) Automatic
Adjustment to Regular Purchase Pricing Period.
(A) If the Company delivers
an Advance Notice on a Trading Day selecting either an Accelerated Purchase Pricing Period or Extended Purchase Pricing Period and such
Advance Notice is received by Investor before 9:00 a.m. New York City time on such Trading Day, in the event the Investor does not deliver
an Advance Notice Confirmation to the Company prior to the Confirmation Deadline and the Company is otherwise able at that time to deliver
an Advance Notice selecting a Regular Purchase Pricing Period that would constitute an Eligible Advance Notice, then such Advance Notice
selecting an Accelerated Purchase Pricing Period or Extended Purchase Pricing Period shall automatically be deemed to have been delivered
selecting a Regular Purchase Pricing Period with the “Deemed Delivered Time” being the start of Regular Trading Hours on the
Trading Day immediately succeeding the Confirmation Deadline, provided, however, that if the Investor has not delivered an Advance
Notice Confirmation to the Company, the Company may rescind such Advance Notice (i) after the Confirmation Deadline and before 11:59 p.m.
New York City time on the date of the Confirmation Deadline or (ii) by electing to opt out on such Advance Notice.
13
(B) If the Company delivers
an Advance Notice on an After Market Trading Day selecting an Overtime Purchase Pricing Period and such Advance Notice is received by
the Investor during the After Market Notice Hours on such After Market Trading Day, in the event the Investor has not delivered an Advance
Notice Confirmation to the Company prior to the Confirmation Deadline and the Company is otherwise able at that time to deliver an Advance
Notice selecting a Regular Purchase Pricing Period that would constitute an Eligible Advance Notice, then such Advance Notice with the
Overtime Purchase Pricing Period shall automatically be deemed to have been delivered selecting a Regular Purchase Pricing Period with
the “Deemed Delivered Time” being the start of Regular Trading Hours on the Trading Day immediately succeeding the Confirmation
Deadline, provided, however, that if the Investor has not delivered an Advance Notice Confirmation to the Company, the Company
may rescind such Advance Notice (i) after the Confirmation Deadline and before 11:59 p.m. New York City time on the date of the Confirmation
Deadline or (ii) by electing to opt out on such Advance Notice.
Section 2.02. Advance Limitations,
Regulatory. Regardless of the Advance requested in an Advance Notice, the final number of Shares to be issued and sold pursuant to
such Advance Notice shall be reduced (if at all) in accordance with each of the following limitations:
(a) Ownership
Limitation; Commitment Amount. At the request of the Company, the Investor will inform the Company in writing of the number of Common
Shares the Investor currently beneficially owns. At the request of the Investor, the Company shall promptly confirm orally or in writing
to the Investor the number of Common Shares then outstanding. Notwithstanding anything to the contrary contained in this Agreement, the
Investor shall not be obligated to purchase or acquire, and shall not purchase or acquire, any Common Shares under this Agreement which,
when aggregated with all other Common Shares beneficially owned by the Investor and its Affiliates (as calculated pursuant to Section
13(d) of the Exchange Act and Rule 13d-3 promulgated thereunder), would result in the beneficial ownership by the Investor and its Affiliates
(on an aggregated basis) to exceed 4.99% of the then outstanding voting power or number of Common Shares (the “Ownership Limitation”).
In connection with each Advance Notice, any portion of an Advance that would (i) cause the Investor to exceed the Ownership Limitation
or (ii) cause the aggregate number of Shares issued and sold to the Investor hereunder to exceed the Commitment Amount shall automatically
be withdrawn with no further action required by the Company, and such Advance Notice shall be deemed automatically modified to reduce
the Advance by an amount equal to such withdrawn portion; provided that in the event of any such automatic withdrawal and automatic modification,
the Investor will promptly notify the Company of such event. The Investor, upon notice to the Company, may increase or decrease the Ownership
Limitation provisions of this Section 2.02, provided that the Ownership Limitation in no event exceeds 9.99% of the number of Common Shares
outstanding immediately after giving effect to the issuance of Shares held by the Investor and the Ownership Limitation provisions of
this Section 2.02 shall continue to apply. Any increase in the Ownership Limitation will not be effective until the sixty-first (61st)
day after such notice is delivered to the Company. Since the Investor will not be obligated to report to the Company the number of Shares
it may hold at the time of an Advance Notice, unless the Advance Notice at issue would result in the issuance of Shares in excess of the
Ownership Limitation without regard to any other shares which may be beneficially owned by the Investor or an Affiliate thereof, the Investor
shall have the authority and obligation to determine whether the restriction contained in this Section 2.02 will limit any particular
Advance Notice and to the extent that the Investor determines that the limitation contained in this Section 2.02 applies, the determination
of which portion of the principal amount of the applicable Advance Notice shall be the responsibility and obligation of the Investor.
(b) Registration
Limitation. In no event shall an Advance exceed the amount registered in respect of the transactions contemplated hereby under the
Registration Statement then in effect (the “Registration Limitation”). In connection with each Advance Notice, any
portion of an Advance that would exceed the Registration Limitation shall automatically be withdrawn with no further action required by
the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested Advance by
an amount equal to such withdrawn portion; provided that in the event of any such automatic withdrawal and automatic modification, the
Investor will promptly notify the Company of such event.
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(c) Compliance
with Rules of Principal Market. Notwithstanding anything to the contrary herein, the Company shall not effect any sales under this
Agreement and the Investor shall not have the obligation to purchase Shares under this Agreement to the extent (but only to the extent)
that after giving effect to such purchase and sale the aggregate number of Common Shares issued under this Agreement would exceed 19.99%
of the aggregate number of Common Shares issued and outstanding as of the execution date of this Agreement, which number shall be reduced,
on a share-for-share basis, by the number of Common Shares issued or issuable pursuant to any transaction or series of transactions that
may be aggregated with the transactions contemplated by this Agreement under the applicable rules of the Principal Market (such maximum
number of shares, the “Exchange Cap”) unless the Company has obtained Stockholder Approval for the issuance of Common
Shares pursuant to this Agreement in excess of the Exchange Cap in accordance with the applicable rules of the Principal Market. In connection
with each Advance Notice, any portion of an Advance that would exceed the Exchange Cap shall automatically be withdrawn with no further
action required by the Company and such Advance Notice shall be deemed automatically modified to reduce the aggregate amount of the requested
Advance by an amount equal to such withdrawn portion in respect of each Advance Notice.
(d) Volume
Threshold Limitation In connection with any Advance Notice, if the total number of Common Shares traded on the Principal Market during
the applicable Pricing Period (excluding any Block Trades and, in the case of a Regular Purchase Pricing Period, any Excluded Day(s)),
is less than the applicable Volume Threshold (the “Volume Threshold Failure”), then the number of Advance Shares issued
and sold pursuant to such Advance Notice shall automatically be reduced to the greater of (i) the applicable Volume Limit and (ii) the
number of Shares sold by the Investor during the Regular Trading Hours During Pricing Period applicable to such Pricing Period (the “Volume
Adjusted Advance Amount”), but in each case not to exceed the amount requested in the Advance Notice or any limitations set
forth in Section 2.02.
(e) Advance
Halt. Notwithstanding anything to the contrary in this Agreement, if on any day during the Pricing Period an Advance Halt exists,
the parties agree that the Pricing Period of the pending Advance shall end and the final number of Common Shares to be purchased by the
Investor at the Closing for such Advance shall be equal to the number of Common Shares sold by the Investor during the applicable Pricing
Period prior to the notification from the Company of such Advance Halt, but in each case not to exceed the amount requested in the Advance
Notice (the “Halt Adjusted Advance Amount”).
(f) Adjusted
Advance Amount. For avoidance of doubt, in connection with a given Pricing Period for which a Volume Adjusted Advance Amount or a
Halt Adjusted Advance Amount applies, the Advance Shares for such Pricing Period shall be automatically adjusted to the lower of (i) the
Volume Adjusted Advance Amount, and (ii) the Halt Adjusted Advance Amount, but in each case not to exceed the amount requested in the
Advance Notice or any limitations set forth in Section 2.02 (the “Adjusted Advance Amount”).
Section 2.03. Unconditional
Contract. Notwithstanding any other provision in this Agreement, the Company and the Investor acknowledge and agree that upon the
Investor’s receipt of a valid Advance Notice from the Company the Parties shall be deemed to have entered into an unconditional
contract binding on both Parties for the purchase and sale of Advance Shares pursuant to such Advance Notice in accordance with the terms
of this Agreement and (i) subject to Applicable Laws and (ii) subject to Section 6.20, the Investor may sell Common Shares after receipt
of an Advance Notice, including during a Pricing Period.
Section 2.04. Closings.
The closing of each Advance and each sale and purchase of Advance Shares (each, a “Closing”) shall take place as soon
as practicable on each applicable Advance Date in accordance with the procedures set forth below. The Company acknowledges that the final
number of Common Shares to be issued and sold pursuant to an Advance Notice and the Purchase Price will not be known at the time an Advance
Notice is delivered but shall be determined on each Closing based on the daily prices of the Common Shares that are the inputs to the
determination of the Purchase Price, the Volume Threshold and the Adjusted Advance Amount. In connection with each Closing, the Company
and the Investor shall fulfill each of its obligations as set forth below:
(a) On
or prior to each Advance Date, the Investor shall deliver to the Company a Settlement Document along with a report by the Reporting Service,
indicating the applicable Market Price for the applicable Trading Days during the Pricing Period, in each case in accordance with the
terms and conditions of this Agreement.
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(b) Promptly
after receipt of the Settlement Document with respect to each Advance (and, in any event, not later than one Trading Day after such receipt),
the Company will, or will cause its transfer agent to, electronically transfer such number of Advance Shares to be purchased by the Investor
(as set forth in the Settlement Document) by crediting the Investor’s account or its designee’s account at The Depository
Trust Company through its Deposit Withdrawal at Custodian System or by such other means of delivery as may be mutually agreed upon by
the parties hereto, and transmit notification to the Investor that such share transfer has been requested. Within one (1) Trading Day
following the receipt of the Advance Shares by the Investor, the Investor shall pay to the Company the Aggregate Purchase Price of the
Advance Shares (as set forth in the Settlement Document), in cash via wire transfer of immediately available funds to an account designated
by the Company in writing and transmit notification to the Company that such funds transfer has been requested. No fractional shares shall
be issued, and any fractional amounts shall be rounded to the next higher whole number of shares. To facilitate the transfer of the Common
Shares by the Investor, the Common Shares will not bear any restrictive legends so long as there is an effective Registration Statement
covering the resale of such Common Shares (it being understood and agreed by the Investor that notwithstanding the lack of restrictive
legends, the Investor may only sell such Common Shares pursuant to the Plan of Distribution set forth in the Prospectus included in the
Registration Statement and otherwise in compliance with the requirements of the Securities Act (including any applicable prospectus delivery
requirements) or pursuant to an available exemption).
(c) On
or prior to the applicable Advance Date, each of the Company and the Investor shall deliver to the other all documents, instruments and
writings expressly required to be delivered by either of them pursuant to this Agreement in order to implement and effect the transactions
contemplated herein.
(d) Notwithstanding
anything to the contrary in this Agreement, if on any day during the Pricing Period (i) the Company notifies the Investor that a Material
Outside Event has occurred, or (ii) the Company notifies the Investor of a Black Out Period, the parties hereto agree that any pending
Advance shall end and the final number of Advance Shares to be purchased by the Investor at the Closing for such Advance shall be equal
to the number of Common Shares sold by the Investor during the applicable Pricing Period prior to the notification from the Company of
a Material Outside Event or Black Out Period.
Section 2.05. Hardship.
(a) In
the event the Investor sells Common Shares after receipt, or deemed receipt, of an Advance Notice and the Company fails to perform its
obligations as mandated in this Agreement, the Company agrees that in addition to and in no way limiting the rights and obligations set
forth in Article VI hereto and in addition to any other remedy to which the Investor is entitled at law or in equity, including, without
limitation, specific performance, it will hold the Investor harmless against any loss, claim, damage, or expense (including reasonable
legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and acknowledges that irreparable
damage may occur in the event of any such default. It is accordingly agreed that the Investor shall be entitled to an injunction or injunctions
to prevent such breaches of this Agreement and to specifically enforce (subject to Applicable Laws and the rules of the Principal Market),
without the posting of a bond or other security, the terms and provisions of this Agreement.
(b) In
the event the Company provides an Advance Notice and the Investor fails to perform its obligations as mandated in Section 2.02, the Investor
agrees that in addition to and in no way limiting the rights and obligations set forth in Article VI hereto and in addition to any other
remedy to which the Company is entitled at law or in equity, including, without limitation, specific performance, it will hold the Company
harmless against any loss, claim, damage, or expense (including reasonable legal fees and expenses), as incurred, arising out of or in
connection with such default by the Investor and acknowledges that irreparable damage may occur in the event of any such default. It is
accordingly agreed that the Company shall be entitled to an injunction or injunctions to prevent such breaches of this Agreement and to
specifically enforce (subject to the Securities Act and the rules of the Principal Market), without the posting of a bond or other security,
the terms and provisions of this Agreement.
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Article III. Representations and
Warranties of the Investor
The Investor hereby represents and warrants to the
Company, as of the date hereof, as of each Advance Notice Date and as of the date of each Closing that:
Section 3.01. Organization
and Authorization. The Investor is duly organized, validly existing and in good standing under the laws of the State of Delaware and
has the requisite corporate power and authority to enter into and perform its obligations under the Transaction Documents to which it
is a party and to purchase or acquire Common Shares in accordance with the terms hereof. The decision to invest and the execution and
delivery of the Transaction Documents to which it is a party by the Investor, the performance by the Investor of its obligations hereunder
and the consummation by the Investor of the transactions contemplated hereby have been duly authorized and require no other proceedings
on the part of the Investor. The undersigned has the right, power and authority to execute and deliver the Transaction Documents to which
it is a party and all other instruments on behalf of the Investor or its stockholders. This Agreement and the Transaction Documents to
which it is a party have been duly executed and delivered by the Investor and, assuming the execution and delivery hereof and acceptance
thereof by the Company, will constitute the legal, valid and binding obligations of the Investor, enforceable against the Investor in
accordance with its terms.
Section 3.02. Evaluation of
Risks. The Investor has such knowledge and experience in financial, tax and business matters as to be capable of evaluating the merits
and risks of, and bearing the economic risks entailed by, an investment in the Common Shares and of protecting its interests in connection
with the transactions contemplated hereby. The Investor acknowledges and agrees that its investment in the Company involves a high degree
of risk, and that the Investor may lose all or a part of its investment.
Section 3.03. No Legal, Investment
or Tax Advice from the Company. The Investor acknowledges that it had the opportunity to review the Transaction Documents and the
transactions contemplated by the Transaction Documents with its own legal counsel and investment and tax advisors. The Investor is relying
solely on such counsel and advisors and not on any statements or representations of the Company or any of the Company’s representatives
or agents for legal, tax, investment or other advice with respect to the Investor’s acquisition of Common Shares hereunder, the
transactions contemplated by this Agreement or the laws of any jurisdiction, and the Investor acknowledges that the Investor may lose
all or a part of its investment.
Section 3.04. Investment Purpose.
The Investor is acquiring the Common Shares for its own account, for investment purposes and not with a view towards, or for resale in
connection with, the public sale or distribution thereof, except pursuant to sales registered under or exempt from the registration requirements
of the Securities Act; provided, however, that by making the representations herein, the Investor does not agree, or make any representation
or warranty, to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time
in accordance with, or pursuant to, a Registration Statement filed pursuant to this Agreement or an applicable exemption under the Securities
Act. The Investor does not presently have any agreement or understanding, directly or indirectly, with any Person to sell or distribute
any of the Shares. The Investor acknowledges that it will be disclosed as an “underwriter” and a “selling stockholder”
in each Registration Statement and in any Prospectus contained therein to the extent required by applicable law and to the extent the
Prospectus is related to the resale of Registrable Securities. The Investor is acquiring the Shares hereunder in the ordinary course of
its business.
Section 3.05. Accredited Investor.
The Investor is an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D.
Section 3.06. Information.
The Investor and its advisors (and its counsel), if any, have been furnished with all materials relating to the business, finances and
operations of the Company and information the Investor deemed material to making an informed investment decision. The Investor and its
advisors (and its counsel), if any, have been afforded the opportunity to ask questions of the Company and its management and have received
answers to such questions. Neither such inquiries nor any other due diligence investigations conducted by such Investor or its advisors
(and its counsel), if any, or its representatives shall modify, amend or affect the Investor’s right to rely on the Company’s
representations and warranties contained in this Agreement. The Investor acknowledges and agrees that the Company has not made to the
Investor, and the Investor acknowledges and agrees it has not relied upon, any representations and warranties of the Company, its employees
or any third party other than the representations and warranties of the Company contained in this Agreement. The Investor understands
that its investment involves a high degree of risk. The Investor has sought such accounting, legal and tax advice, as it has considered
necessary to make an informed investment decision with respect to the transactions contemplated hereby.
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Section 3.07. Not an Affiliate.
The Investor is not an officer, director or a person that directly, or indirectly through one or more intermediaries, controls or is controlled
by, or is under common control with the Company or any “Affiliate” of the Company (as that term is defined in Rule
405 promulgated under the Securities Act).
Section 3.08. No Prior Short
Sales. At no time prior to the date of this Agreement has the Investor, its sole member, any of their respective officers, or any
entity managed or controlled by the Investor or its sole member, engaged in or effected, in any manner whatsoever, directly or indirectly,
for its own principal account, any (i) “short sale” (as such term is defined in Rule 200 of Regulation SHO of the Exchange
Act) of the Common Shares or (ii) hedging transaction, in either case which establishes a net short position with respect to the Common
Shares that remains in effect as of the date of this Agreement.
Section 3.09. General Solicitation.
Neither the Investor, nor any of its Affiliates, nor any person acting on its or their behalf, has engaged or will engage in any form
of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of the Common
Shares by the Investor.
Article IV. Representations and
Warranties of the Company
Except where specifically set
forth below with respect to certain specified representations and warranties or in a disclosure schedule delivered by the Company to the
Investor concurrently with this Agreement, which is hereby incorporated by reference in, and constitutes an integral part of, this Agreement
(the “Disclosure Schedules”), the Company hereby represents and warrants to the Investor that, as of the date hereof,
as of each Advance Notice Date and as of the date of each Closing:
Section 4.01. Organization
and Qualification. The Company and each of its Subsidiaries are entities duly formed, validly existing and in good standing under
the laws of the jurisdiction in which they are formed and have the requisite power and authority to own their properties and to carry
on their business as now being conducted. The Company and each of its Subsidiaries is duly qualified to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that
the failure to be so qualified or be in good standing would not have a Material Adverse Effect.
Section 4.02. Authorization,
Enforcement, Compliance with Other Instruments. The Company has the requisite corporate power and authority to enter into and perform
its obligations under this Agreement and the other Transaction Documents and to issue the Shares in accordance with the terms hereof and
thereof. The execution and delivery of this Agreement and the other Transaction Documents by the Company and its Subsidiaries, and the
consummation by the Company and its Subsidiaries of the transactions contemplated hereby and thereby, including, without limitation, have
been duly authorized by the Company’s board of directors or other governing body, as applicable, and (other than (i) the filing
with the SEC of a Form D with respect to the transactions contemplated hereby and the Current Report, (ii) with respect to the applicable
Closing, confirmation that Stockholder Approval has been obtained, if applicable, (iii) with respect to any applicable Closings, the filing
of an additional listing application with the Principal Market, and (iv) any other filings as may be required by any state securities
agencies (collectively, the “Required Approvals”)) and no further filing, consent or authorization is required by the
Company, its Subsidiaries, their respective boards of directors or their stockholders or other governing body. This Agreement and the
other Transaction Documents to which the Company is a party have been (or, when executed and delivered, will be) duly executed and delivered
by the Company and, assuming the execution and delivery thereof and acceptance by the Investor, constitute (or, when duly executed and
delivered, will be) the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their
respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or other laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies
and except as rights to indemnification and to contribution may be limited by federal or state securities law. Except for the Required
Approvals, neither the Company nor any Subsidiary is required to obtain any consent from, authorization or order of, or make any filing
or registration with, any Governmental Entity (as defined below) or any regulatory or self-regulatory agency or any other Person in order
for it to execute, deliver or perform any of its respective obligations under or contemplated by the Transaction Documents, in each case,
in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company or any
Subsidiary is required to obtain pursuant to the preceding sentence have been or will be obtained or effected on or prior to such Closing,
and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or any of
its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Transaction Documents.
Except as disclosed in Schedule 4.02, the Company is not in violation of the requirements of the Principal Market and has no knowledge
of any facts or circumstances which could reasonably lead to delisting or suspension of the Common Shares. “Governmental Entity”
means any nation, state, county, city, town, village, district, or other political jurisdiction of any nature, federal, state, local,
municipal, foreign, or other government, governmental or quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal), multinational organization or body; or body exercising, or entitled
to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power of any nature or instrumentality
of any of the foregoing, including any entity or enterprise owned or controlled by a government or a public international organization
or any of the foregoing.
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Section 4.03. Authorization
of the Common Shares. The issuance of the Common Shares has been duly authorized and, upon issuance in accordance with the terms of
the Transaction Documents and against payment therefore as provided herein, the Common Shares shall be validly issued, fully paid and
non-assessable and free from all preemptive or similar rights, mortgages, defects, claims, liens, pledges, charges, taxes, rights of first
refusal, encumbrances, security interests and other encumbrances with respect to the issuance thereof.
Section 4.04. No Conflict.
The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance of the Common Shares) will not (i) result in a violation
of the certificate of incorporation or other organizational documents of the Company or its Subsidiaries (with respect to consummation,
as the same may be amended prior to the date on which any of the transactions contemplated hereby are consummated), (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights
of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or its Subsidiaries
is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or its Subsidiaries or by which any property or asset of the Company or its Subsidiaries
is bound or affected except, in the case of clause (ii) or (iii) above, to the extent such violations that would not reasonably be expected
to have a Material Adverse Effect.
Section 4.05. Acknowledgement.
The Company acknowledges its obligation to issue the Common Shares upon delivery of an Advance Notice is absolute and unconditional, subject
to any limitations provided for herein, regardless of the dilutive effect that such issuance may have on the ownership interests of other
stockholders of the Company.
Section 4.06. SEC Documents;
Financial Statements. Except as set forth in Schedule 4.06, the Company has timely filed (giving effect to permissible extensions
in accordance with Rule 12b-25 under the Exchange Act) all SEC Documents. The Company has delivered or made available to the Investor
through the SEC’s website at http://www.sec.gov, true and complete copies of the SEC Documents, as applicable. Except as disclosed
in amendments or subsequent filings to the SEC Documents, as of its filing date (or, if amended or superseded by a filing prior to the
date hereof, on the date of such amended or superseded filing), each of the SEC Documents complied in all material respects with the requirements
of the Exchange Act or the Securities Act, as applicable, and the rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and did not contain any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
Section 4.07. Financial Statements.
The consolidated financial statements of the Company included or incorporated by reference in the SEC Documents, together with the related
notes and schedules, present fairly, in all material respects, the consolidated financial position of the Company and the Subsidiaries
as of the dates indicated and the consolidated results of operations, cash flows and changes in stockholders’ equity of the Company
for the periods specified and have been prepared in compliance with the requirements of the Securities Act and Exchange Act and in conformity
with generally accepted accounting principles in the United States (“GAAP”) applied on a consistent basis (except for
(i) such adjustments to accounting standards and practices as are noted therein, (ii) in the case of unaudited interim financial statements,
to the extent such financial statements may not include footnotes required by GAAP or may be condensed or summary statements and (iii)
such adjustments which are not material, either individually or in the aggregate) during the periods involved; the other financial and
statistical data with respect to the Company and the Subsidiaries contained or incorporated by reference in the SEC Documents are accurately
and fairly presented and prepared on a basis consistent with the financial statements and books and records of the Company; there are
no financial statements (historical or pro forma) that are required to be included or incorporated by reference in the SEC Documents that
are not included or incorporated by reference as required; the Company and the Subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not described in the SEC Documents (including the exhibits thereto);
and all disclosures contained or incorporated by reference in the SEC Documents regarding “non-GAAP financial measures” (as
such term is defined by the rules and regulations of the SEC), if any, comply in all material respects with Regulation G of the Exchange
Act and Item 10 of Regulation S-K under the Securities Act, to the extent applicable. The interactive data in eXtensible Business Reporting
Language included or incorporated by reference in the SEC Documents fairly presents the information called for in all material respects
and has been prepared in accordance with the SEC’s rules and guidelines applicable thereto.
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Section 4.08. Registration
Statement and Prospectus. The Company and the transactions contemplated by this Agreement meet the requirements for and comply with
the conditions for the use of Form S-1 under the Securities Act. Each Registration Statement and the offer and sale of Common Shares as
contemplated hereby, if and when filed, will meet the requirements of Rule 415 under the Securities Act and comply in all material respects
with said rule. Any statutes, regulations, contracts or other documents that are required to be described in a Registration Statement
or a Prospectus, or to be filed as exhibits to a Registration Statement have been so described or filed. Copies of each Registration Statement,
any Prospectus, and any such amendments or supplements thereto and all documents incorporated by reference therein that were filed with
the SEC on or prior to the date of this Agreement have been delivered, or are available through EDGAR, to the Investor and its counsel.
The Company has not distributed and, prior to the later to occur of each Advance Notice Date and completion of the distribution of the
Shares, will not distribute any offering material in connection with the offering or sale of the Common Shares other than a Registration
Statement and the Prospectus to which the Investor has consented.
Section 4.09. No Misstatement
or Omission. Each Registration Statement, when it became or becomes effective, and any Prospectus, on the date of such Prospectus
or amendment or supplement, conformed and will conform in all material respects with the requirements of the Securities Act. At each Advance
Notice Date, the Registration Statement, and the Prospectus, as of such date, will conform in all material respects with the requirements
of the Securities Act. Each Registration Statement, when it became or becomes effective, did not, and will not, contain an untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading.
Each Prospectus did not, or will not, include an untrue statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were made, not misleading. The documents incorporated by reference
in a Prospectus or any Prospectus Supplement did not, and any further documents filed and incorporated by reference therein will not,
when filed with the SEC, contain an untrue statement of a material fact or omit to state a material fact required to be stated in such
document or necessary to make the statements in such document, in light of the circumstances under which they were made, not misleading.
The foregoing shall not apply to statements in, or omissions from, any such document made in reliance upon, and in conformity with, information
furnished to the Company by the Investor specifically for use in the preparation thereof.
Section 4.10. Conformity with
Securities Act and Exchange Act. Each Registration Statement, each Prospectus, or any amendment or supplement thereto, and the documents
incorporated by reference in each Registration Statement, Prospectus or any amendment or supplement thereto, when such documents were
or are filed with the SEC under the Securities Act or the Exchange Act or became or become effective under the Securities Act, as the
case may be, conformed or will conform in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable.
Section 4.11. Equity Capitalization.
(a) Authorized
and Outstanding Capital Stock. As of the date hereof, the authorized capital stock of the Company consists of 22,500,000 shares of
capital stock consisting of 12,500,000 Common Shares and 10,000,000 shares of undesignated preferred stock, par value $0.0001 per share,
of which 3,950 shares have been designated as Series C Preferred Stock of the Company, par value $0.0001 per share (the “Series
C Preferred Stock”), 1,000 shares have been designated as Series B Preferred Stock of the Company, par value $0.0001 per share
(the “Series B Preferred Stock”), 10,000 shares have been designated as Series A Preferred Stock of the Company, par
value $0.0001 per share (the “Series A Preferred Stock). As of the date hereof, the Company has (i) 1,022,235 Common Shares
issued and outstanding, (ii) 10,000 shares of Series A Preferred Stock issued and outstanding, (iii) 1,000 shares of Series B Preferred
Stock issued and outstanding, (iii) 3,950 shares of Series C Preferred Stock issued and outstanding.
(b) Valid
Issuance; Available Shares. All of such outstanding shares of capital stock are duly authorized and have been validly issued
and are fully paid and nonassessable.
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(c) Existing
Securities; Obligations. Except as disclosed in Schedule 4.11: (A) none of the Company’s or any Subsidiary’s shares,
interests or shares of capital stock is subject to preemptive rights or any other similar rights or liens suffered or permitted by the
Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests
or shares of capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Company or any of its Subsidiaries is or may become bound to issue additional shares, interests or shares of capital stock of the
Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares, interests or shares of capital
stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under the Securities Act; (D) there are no outstanding
securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are
no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem
a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the issuance of the Shares; and (F) neither the Company nor any Subsidiary has any stock appreciation
rights or “phantom stock” plans or agreements or any similar plan or agreement.
Section 4.12. Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all material trademarks, trade
names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and rights, if any, necessary to conduct their respective businesses as now conducted, except
as would not cause a Material Adverse Effect. The Company and its Subsidiaries have not received written notice of any infringement by
the Company or its Subsidiaries of trademark, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names,
service marks, service mark registrations, or trade secrets, except as would not cause a Material Adverse Effect. To the knowledge of
the Company, there is no claim, action or proceeding being made or brought against, or to the Company’s knowledge, being threatened
against the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention, copyright, license, service
names, service marks, service mark registrations, trade secret or other infringement.
Section 4.13. Employee Relations.
Except as disclosed in Schedule 4.13, neither the Company nor any of its Subsidiaries is involved in any labor dispute nor, to
the knowledge of the Company or any of its Subsidiaries, is any such dispute threatened, in each case which is reasonably likely to cause
a Material Adverse Effect.
Section 4.14. Environmental
Laws. The Company and its Subsidiaries (i) have not received written notice alleging any failure to comply in all material respects
with all Environmental Laws (as defined below), (ii) have received all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have not received written notice alleging any failure to comply with
all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure
to so comply would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental
Laws” means all applicable federal, state and local laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation,
laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous
substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations
issued, entered, promulgated or approved thereunder.
Section 4.15. Title. Except
as would not cause a Material Adverse Effect, the Company (or its Subsidiaries) has indefeasible fee simple or leasehold title to its
properties and material assets owned by it, free and clear of any pledge, lien, security interest, encumbrance, claim or equitable interest
other than such as are not material to the business of the Company. Any real property and facilities held under lease by the Company and
its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the Company and its Subsidiaries.
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Section 4.16. Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries
are engaged. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have
a Material Adverse Effect.
Section 4.17. Regulatory Permits.
Except as would not cause a Material Adverse Effect, the Company and its Subsidiaries possess all material certificates, authorizations
and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to own their respective businesses, and
neither the Company nor any such Subsidiary has received any written notice of proceedings relating to the revocation or modification
of any such certificate, authorization or permits.
Section 4.18. Internal Accounting
Controls. Except as set forth in Schedule 4.18, the Company maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general
or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences, and management is not aware of any material weaknesses that are not disclosed
in the SEC Documents as and when required.
Section 4.19. Absence of Litigation.
Except as disclosed in Schedule 4.19, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board,
government agency, self-regulatory organization or body pending against or affecting the Company, the Common Shares or any of the Company’s
Subsidiaries, wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect.
Section 4.20. Absence of Certain
Changes. Except as set forth in Schedule 4.20, since the date of the Company’s most recent audited financial statements contained
in an Annual Report on Form 10-K and the date of the Company’s most recent reviewed financial statements contained in a Quarterly
Report on Form 10-Q, there has been no material adverse change and no material adverse development in the business, assets, liabilities,
properties, operations (including results thereof), condition (financial or otherwise) or prospects of the Company or any of its Subsidiaries.
Since the date of the Company’s most recent audited financial statements contained in an Annual Report on Form 10-K, except as disclosed
in Schedule 4.20, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets,
individually or in the aggregate, outside of the ordinary course of business or (iii) made any capital expenditures, individually or in
the aggregate, outside of the ordinary course of business. Neither the Company nor any of its Subsidiaries has taken any steps to seek
protection pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up,
nor does the Company or any Subsidiary have any knowledge or reason to believe that any of their respective creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead a creditor to do so. Except as set
forth in the SEC Documents, the Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof,
and after giving effect to the transactions contemplated hereby to occur at such Closing, will not be Insolvent (as defined below).
Section 4.21. Subsidiaries.
Other than as set forth in the SEC Documents, the Company does not own or control, directly or indirectly, any interest in any other corporation,
partnership, association or other business entity.
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Section 4.22. Tax Status.
Each of the Company and its Subsidiaries (i) has timely made or filed all foreign, federal and state income and all other tax returns,
reports and declarations required by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested
in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to
the periods to which such returns, reports or declarations apply. The Company has not received written notification of any unpaid taxes
in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company and its Subsidiaries
know of no basis for any such claim where failure to pay would cause a Material Adverse Effect.
Section 4.23. Certain Transactions.
Except as disclosed in the SEC Documents or as not required to be disclosed pursuant to Applicable Laws, none of the officers or directors
of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real
or personal property to or from, or otherwise requiring payments to or from any officer or director, or to the knowledge of the Company,
any corporation, partnership, trust or other entity in which any officer or director has a substantial interest or is an officer, director,
trustee or partner.
Section 4.24. Rights of First
Refusal. The Company is not obligated to offer the Common Shares offered hereunder or any other Company securities offered pursuant
to the Transaction Documents on a right of first refusal basis to any third parties including, but not limited to, current or former stockholders
of the Company, underwriters, brokers, agents or other third parties.
Section 4.25. Dilution.
The Company is aware and acknowledges that issuance of Common Shares hereunder could cause dilution to existing stockholders and could
significantly increase the outstanding number of Common Shares.
Section 4.26. Acknowledgment
Regarding Investor’s Purchase of Shares. The Company acknowledges and agrees that the Investor is acting solely in the capacity
of an arm’s length investor with respect to this Agreement and the transactions contemplated hereunder. The Company further acknowledges
that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement
and the transactions contemplated hereunder and any advice given by the Investor or any of its representatives or agents in connection
with this Agreement and the transactions contemplated hereunder is merely incidental to the Investor’s purchase of the Shares hereunder.
The Company is aware and acknowledges that it shall not be able to request Advances under this Agreement if the Registration Statement
is not effective or if any issuances of Common Shares pursuant to any Advances would violate any rules of the Principal Market. The Company
acknowledges and agrees that it is capable of evaluating and understanding, and understands and accepts, the terms, risks and conditions
of the transactions contemplated by this Agreement.
Section 4.27. Placement Agent’s
Fees. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’
commissions (other than for Persons engaged by the Investor or its investment advisor) relating to or arising out of the transactions
contemplated hereby in connection with the sale of the Common Shares. The Company shall pay, and hold the Investor harmless against, any
liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising in connection with
any such claim. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the
offer or sale of the Common Shares other than Chardan Capital Markets LLC and Digital Offering LLC.
Section 4.28. Relationship
of the Parties. Neither the Company, nor any of its subsidiaries, affiliates, nor any person acting on its or their behalf is a client
or customer of the Investor or any of its affiliates and neither the Investor nor any of its affiliates has provided, or will provide,
any services to the Company or any of its affiliates, its subsidiaries, or any person acting on its or their behalf. The Investor’s
relationship to Company is solely as investor as provided for in the Transaction Documents.
Section 4.29. Forward-Looking
Statements. No forward-looking statement (within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act) contained in the Registration Statement or a Prospectus prepared pursuant to the terms of the Registration Rights Agreement will
be made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.
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Section 4.30. Compliance with
Laws. The Company and each of its Subsidiaries are in compliance in all material respects with Applicable Laws; the Company has not
received a notice of non-compliance, nor knows of, nor has reasonable grounds to know of, any facts that any director, officer, or employee
of the Company or any Subsidiary nor, to the Company’s knowledge, any agent, affiliate or other person acting on behalf of the Company
or any Subsidiary has, has not complied with Applicable Laws, or could give rise to a notice of non-compliance with Applicable Laws, and
is not aware of any pending change or contemplated change to any applicable law or regulation or governmental position; in each case that
would have a Material Adverse Effect.
Section 4.31. Sanctions Matters.
Neither the Company nor any of its Subsidiaries or, to the knowledge of the Company, any director, officer or controlled affiliate of
the Company or any director or officer of any Subsidiary, is a Person that is, or is owned or controlled by a Person that is (i) the subject
of any sanctions administered or enforced by the U.S. Department of Treasury’s Office of Foreign Asset Control (“OFAC”),
the United Nations Security Council, the European Union, His Majesty’s Treasury, or other relevant sanctions authorities, including,
without limitation, designation on OFAC’s Specially Designated Nationals and Blocked Persons List or OFAC’s Foreign Sanctions
Evaders List or other relevant sanctions authority (collectively, “Sanctions”), or (ii) located, organized or resident
in a country or territory that is the subject of Sanctions that broadly prohibit dealings with that country or territory (including, without
limitation, the Crimea, Zaporizhzhia and Kherson regions, the Donetsk People’s Republic and Luhansk People’s Republic in Ukraine,
Cuba, Iran, North Korea, Russia, Sudan and Syria (the “Sanctioned Countries”)). Neither the Company nor any of its
Subsidiaries will, directly or indirectly, use the proceeds from the sale of Common Shares, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other Person (a) for the purpose of funding or facilitating any activities or
business of or with any Person or in any country or territory that, at the time of such funding or facilitation, is the subject of Sanctions
or is a Sanctioned Country, or (b) in any other manner that will result in a violation of Sanctions or Applicable Laws by any Person (including
any Person participating in the transactions contemplated by this Agreement, whether as underwriter, advisor, investor or otherwise).
For the past five years, neither the Company nor any of its Subsidiaries has engaged in, and is now not engaged in, any dealings or transactions
with any Person, or in any country or territory, that at the time of the dealing or transaction is or was the subject of Sanctions or
was a Sanctioned Country. Neither the Company nor any of its Subsidiaries nor any director, officer or controlled affiliate of the Company
or any of its Subsidiaries, has ever had funds blocked by a United States bank or financial institution, temporarily or otherwise, as
a result of OFAC concerns.
Section 4.32. Money Laundering
Laws. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any Governmental Entity (collectively, the “Money Laundering Laws”); and no action, suit
or proceeding by or before any Governmental Entity involving the Company with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.
Section 4.33. No Undisclosed
Events, Liabilities, Developments or Circumstances. Except as disclosed in Schedule 4.33, no event, liability, development
or circumstance has occurred or exists, or is reasonably expected to exist or occur with respect to the Company, any of its Subsidiaries
or any of their respective businesses, properties, liabilities, prospects, operations (including results thereof) or condition (financial
or otherwise), that (i) would be required to be disclosed by the Company under applicable securities laws in a registration statement
on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Shares and which has not been publicly announced,
(ii) could have a material adverse effect on the Investor’s investment hereunder or (iii) could have a Material Adverse Effect.
Section 4.34. Investment Company
Status. The Company is not, and upon consummation of the sale of the Common Shares will not be, an “investment company,”
an affiliate of an “investment company,” a company controlled by an “investment company” or an “affiliated
person” of, or “promoter” or “principal underwriter” for, an “investment company” as such terms
are defined in the Investment Company Act of 1940, as amended.
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Section 4.35. Acknowledgement
Regarding Investor’s Trading Activity. It is understood and acknowledged by the Company that (i) following the public disclosure
of the transactions contemplated by the Transaction Documents in accordance with the terms thereof, the Investor has not been asked by
the Company or any of its Subsidiaries to agree, nor has the Investor agreed with the Company or any of its Subsidiaries, to desist from
effecting any transactions in or with respect to (including, without limitation, purchasing or selling, long and/or short) any securities
of the Company or “derivative” securities based on securities issued by the Company, or to hold any securities of the Company
or “derivative” securities based on securities issued by the Company for any specified term; (ii) the Investor, and counterparties
in “derivative” transactions to which the Investor is a party, directly or indirectly, presently may have a “short”
position in the Common Shares which was established prior to the Investor’s knowledge of the transactions contemplated by the Transaction
Documents; and (iii) the Investor shall not be deemed to have any affiliation with or control over any arm’s length counterparty
in any “derivative” transaction. The Company acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement or any other Transaction Document or any of the documents executed in connection herewith or therewith.
Section 4.36. Cybersecurity.
The Company and its Subsidiaries’ information technology assets and equipment, computers, systems, networks, hardware, software,
websites, applications, and databases (collectively, “IT Systems”) are adequate for, and operate and perform in all
material respects as required in connection with the operation of the business of the Company and its subsidiaries as currently conducted,
free and clear of all material bugs, errors, defects, Trojan horses, time bombs, malware and other corruptants that would reasonably be
expected to have a Material Adverse Effect on the Company’s business. The Company and its Subsidiaries have implemented and maintained
commercially reasonable physical, technical and administrative controls, policies, procedures, and safeguards reasonably designed to maintain
and protect their material confidential information and the integrity, continuous operation, redundancy and security of all IT Systems
and data, including “Personal Data,” used in connection with their businesses. “Personal Data” means (i)
a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification
number, driver’s license number, passport number, credit card number, bank information, or customer or account number; (ii) any
information which would qualify as “personally identifying information” under the Federal Trade Commission Act, as amended;
(iii) “personal data” as defined by the European Union General Data Protection Regulation (“GDPR”) (EU
2016/679); (iv) any information which would qualify as “protected health information” under the Health Insurance Portability
and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (collectively, “HIPAA”);
and (v) any other piece of information that allows the identification of such natural person, or his or her family, or permits the collection
or analysis of any data related to an identified person’s health or sexual orientation. There have been no breaches, violations,
outages or unauthorized uses of or accesses to same, except for those that have been remedied without material cost or liability or the
duty to notify any other person or such, nor any incidents under internal review or investigations relating to the same except in each
case, where such would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. The
Company and its Subsidiaries are presently in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations
of any court or arbitrator or governmental or regulatory authority, internal policies and contractual obligations relating to the privacy
and security of IT Systems and Personal Data and to the protection of such IT Systems and Personal Data from unauthorized use, access,
misappropriation or modification except in each case, where such would not, either individually or in the aggregate, reasonably be expected
to result in a Material Adverse Effect.
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Article V. Indemnification
Section 5.01. Indemnification
by the Company. In consideration of the Investor’s execution and delivery of this Agreement and acquiring the Shares hereunder,
and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and
hold harmless the Investor and its investment manager and each of their respective officers, directors, managers, members, partners, employees
and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) and each
person who controls the Investor within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (collectively,
the “Investor Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and reasonable and documented expenses in connection therewith (irrespective of whether any such Investor
Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”), incurred by the Investor Indemnitees or any of them as a result of,
or arising out of, or relating to (a) any untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement for the registration of the Shares as originally filed or in any amendment thereof, or in any related prospectus, or in any
amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that the
Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the Investor specifically for inclusion therein; (b) any material
misrepresentation or breach of any material representation or material warranty made by the Company in this Agreement or any other certificate,
instrument or document contemplated hereby or thereby; or (c) any material breach of any material covenant, material agreement or material
obligation of the Company contained in this Agreement or any other certificate, instrument or document contemplated hereby or thereby.
To the extent that the foregoing undertaking by the Company may be unenforceable under Applicable Law, the Company shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Law.
Section 5.02. Indemnification
by the Investor. In consideration of the Company’s execution and delivery of this Agreement, and in addition to all of the Investor’s
other obligations under this Agreement, the Investor shall defend, protect, indemnify and hold harmless the Company, its Subsidiaries
and all of its and their officers, directors, stockholders, employees and agents (including, without limitation, those retained in connection
with the transactions contemplated by this Agreement) and each person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the “Company Indemnitees”) from and against any and
all Indemnified Liabilities incurred by the Company Indemnitees or any of them as a result of, or arising out of, or relating to (a) any
untrue statement or alleged untrue statement of a material fact contained in the Registration Statement for the registration of the Shares
as originally filed or in any amendment thereof, or in any related prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that the Investor will only be liable for written information
relating to the Investor furnished to the Company by or on behalf of the Investor specifically for inclusion in the documents referred
to in the foregoing indemnity, and will not be liable in any such case to the extent that any such loss, claim, damage or liability arises
out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Investor by or on behalf of the Company specifically for inclusion therein;
(b) any misrepresentation or breach of any representation or warranty made by the Investor in this Agreement or any instrument or document
contemplated hereby or thereby executed by the Investor; or (c) any breach of any covenant, agreement or obligation of the Investor contained
in this Agreement or any other certificate, instrument or document contemplated hereby or thereby executed by the Investor. To the extent
that the foregoing undertaking by the Investor may be unenforceable under Applicable Laws, the Investor shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under Applicable Laws.
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Section 5.03. Notice of Claim.
Promptly after receipt by an Investor Indemnitee or Company Indemnitee of notice of the commencement of any action or proceeding (including
any governmental action or proceeding) involving an Indemnified Liability, such Investor Indemnitee or Company Indemnitee, as applicable,
shall, if a claim for an Indemnified Liability in respect thereof is to be made against any indemnifying party under this Article V, deliver
to the indemnifying party a written notice of the commencement thereof; but the failure to so notify the indemnifying party will not relieve
it of liability under this Article V except to the extent the indemnifying party is prejudiced by such failure. The indemnifying party
shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel mutually reasonably satisfactory to the indemnifying party and
the Investor Indemnitee or Company Indemnitee, as the case may be; provided, however, that an Investor Indemnitee or Company Indemnitee
shall have the right to retain its own counsel with the actual and reasonable third party fees and expenses of not more than one counsel
for such Investor Indemnitee or Company Indemnitee to be paid by the indemnifying party, if, in the reasonable opinion of counsel retained
by the indemnifying party, the representation by such counsel of the Investor Indemnitee or Company Indemnitee and the indemnifying party
would be inappropriate due to actual or potential differing interests between such Investor Indemnitee or Company Indemnitee and any other
party represented by such counsel in such proceeding. The Investor Indemnitee or Company Indemnitee shall cooperate fully with the indemnifying
party in connection with any negotiation or defense of any such action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the Investor Indemnitee or Company Indemnitee which relates to such action or claim. The
indemnifying party shall keep the Investor Indemnitee or Company Indemnitee reasonably apprised as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement of any action, claim or proceeding
effected without its prior written consent, provided, however, that the indemnifying party shall not unreasonably withhold, delay or condition
its consent. No indemnifying party shall, without the prior written consent of the Investor Indemnitee or Company Indemnitee, consent
to entry of any judgment or enter into any settlement or other compromise which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Investor Indemnitee or Company Indemnitee of a release from all liability in respect to such
claim or litigation. Following indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of
the Investor Indemnitee or Company Indemnitee with respect to all third parties, firms or corporations relating to the matter for which
indemnification has been made. The indemnification required by this Article V shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are received and payment therefor is due.
Section 5.04. Remedies.
The remedies provided for in this Article V are not exclusive and shall not limit any right or remedy which may be available to any indemnified
person at law or equity. The obligations of the parties to indemnify or make contribution under this Article V shall survive expiration
or termination of this Agreement.
Section 5.05. Limitation of
liability. Notwithstanding the foregoing, no party shall seek, nor shall any be entitled to recover from the other party be liable
for, special, incidental, indirect, consequential, punitive or exemplary damages.
Article VI. Covenants
The Company covenants with the Investor, and the Investor
covenants with the Company, as follows, which covenants of one party are for the benefit of the other party, during the Commitment Period:
Section 6.01. Effective Registration
Statement. From the time that the initial Registration Statement is declared effective by the SEC and continuing thereafter during
the Commitment Period, the Company shall maintain the continuous effectiveness of a Registration Statement filed with the SEC under the
Securities Act pursuant to and in accordance with the Registration Rights Agreement.
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Section 6.02. Listing.
The Company shall use its best efforts to continue the listing and trading of its Common Shares and the listing of the Shares on the Principal
Market and to comply with the Company’s reporting, filing and other obligations under the rules and regulations of the Principal
Market; provided that if the Company receives any final and non-appealable notice that the listing or quotation of the Common Shares
on the Principal Market shall be terminated on a date certain or if the Company fails to maintain compliance with the continued listing
requirements of the Principal Market, the Company shall promptly (and in any case within 24 hours) notify the Investor of such fact in
writing and shall use its commercially reasonable efforts to cause the Common Shares to be listed or quoted on another Principal Market.
Section 6.03. Blue Sky.
The Company shall take such action, if any, as is necessary by the Company in order to obtain an exemption for or to qualify the Shares
for issuance by the Company to the Investor pursuant to the Transaction Documents, and at the request of the Investor, the subsequent
resale of Registrable Securities by the Investor, in each case, under applicable state securities or “Blue Sky” laws and shall
provide evidence of any such action so taken to the Investor from time to time during the Commitment Period; provided, however,
that the Company shall not be required in connection therewith or as a condition thereto to (x) qualify to do business in any jurisdiction
where it would not otherwise be required to qualify, (y) subject itself to general taxation in any such jurisdiction, or (z) file a general
consent to service of process in any such jurisdiction.
Section 6.04. Suspension of
Registration Statement.
(a) Establishment
of a Black Out Period. During the Commitment Period, the Company from time to time may suspend the use of a Registration Statement
by written notice to the Investor in the event that the Company determines in its sole discretion in good faith that such suspension is
necessary to (A) delay the disclosure of material nonpublic information concerning the Company, the disclosure of which at the time is
not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the Registration Statement
or Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading (a “Black Out Period”).
(b) No
Sales by Investor During the Black Out Period. During such Black Out Period, the Investor agrees not to sell any Common Shares pursuant
to such Registration Statement, but may sell Common Shares pursuant to an exemption from registration, if available, subject to the Investor’s
compliance with Applicable Laws.
(c) Limitations
on the Black Out Period. The Company shall not impose any Black Out Period that is longer than 30 days or in a manner that is more
restrictive (including, without limitation, as to duration) than the comparable restrictions that the Company may impose on transfers
of the Company’s equity securities by its directors and senior executive officers. In addition, the Company shall not deliver any
Advance Notice during any Black Out Period. If the public announcement of such material, nonpublic information is made during a Black
Out Period, the Black Out Period shall terminate immediately after such announcement, and the Company shall immediately notify the Investor
of the termination of the Black Out Period.
Section 6.05. Listing of Common
Shares. As of each Advance Notice Date, the Common Shares to be issued and sold by the Company from time to time hereunder will have
been registered under Section 12(b) of the Exchange Act and approved for listing on the Principal Market, subject to official notice of
issuance. As of each Advance Notice Date, the Common Shares shall not have been limited or suspended from trading on the Principal Market
(other than suspensions of not more than two (2) Trading Days and occurring prior to the applicable date of determination due to business
announcements by the Company) nor shall delisting or suspension by the Principal Market have been threatened (with a reasonable prospect
of delisting occurring after giving effect to all applicable notice, appeal, compliance and hearing periods (it being understood by the
Company and the Investor that no reasonable prospect of delisting will occur prior to the Company holding an annual or special meeting
of its stockholders in order to obtain Stockholder Approval, including any postponement thereof) or any communications from the Principal
Market related to such notice that do not actually effect the delisting or suspension of the Common Shares) or be reasonably likely to
occur or pending as evidenced by (A) a writing by such Principal Market or (B) the Company falling below the minimum listing maintenance
requirements of the Principal Market on which the Common Shares are then listed, provided that the Investor may waive such condition at
the Investor’s sole option.
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Section 6.06. Opinion of Counsel.
Prior to the date of the delivery by the Company of the first Advance Notice, the Investor shall have received an opinion letter from
one or more counsels to the Company in form and substance reasonably satisfactory to the Investor.
Section 6.07. Exchange Act
Registration. The Company will file in a timely manner all reports and other documents required of it as a reporting company under
the Exchange Act and, during the Commitment Period, will not take any action or file any document (whether or not permitted by Exchange
Act or the rules thereunder) to terminate or suspend its reporting and filing obligations under the Exchange Act.
Section 6.08. Legal Opinions;
Restrictive Legends. The Company is obligated to cause its legal counsel to deliver legal opinions to the Transfer Agent in connection
with any legend removal requested pursuant to Rule 144, within one (1) Trading Day of such legend removal request, subject to the Investor
providing customary representations and other documentation, if any, as reasonably requested by the Company, its counsel or the Transfer
Agent. In addition, within one (1) Trading Day after the initial Registration Statement which covers the Shares is declared effective
by the SEC, the Company shall deliver, and shall cause its legal counsel to deliver, to the Transfer Agent (with copies to the Investor)
a legal opinion stating that such Shares are registered for resale pursuant to such Registration Statement that has been declared effective
by the SEC and that any restrictive legends on the Shares shall be removed in connection with the resale of such Shares by the Investor
pursuant to such Registration Statement. To the extent that a legal opinion is not provided (either timely or at all), then, in addition
to being a breach of the covenant in this Section 6.08 hereunder, the Company agrees to reimburse the Investor for all costs incurred
by the Investor in connection with any legal opinions paid for by the Investor in connection with the sale or transfer of the Shares.
The Investor shall notify the Company of any such costs and expenses it incurs that are referred to in this section from time to time
and all amounts owed hereunder shall be paid by the Company promptly.
Section 6.09. Transfer Agent
Instructions. For any time while there is a Registration Statement in effect for this transaction, the Company shall (if required
by the transfer agent for the Common Shares) deliver to the transfer agent for the Common Shares (with a copy to the Investor) (i) instructions
to issue Common Shares to the Investor free of restrictive legends upon each Advance if the delivery of such instructions are consistent
with Applicable Law, in each case supported as needed by an opinion from legal counsel for the Company and (ii) an opinion of Company
counsel, stating that Rule 144 promulgated under the Securities Act (“Rule 144”) is available as an exemption from
registration for the resale of the Common Shares.
Section 6.10. Corporate Existence.
The Company will use commercially reasonable efforts to preserve and continue the corporate existence of the Company during the Commitment
Period.
Section 6.11. Notice of Certain
Events Affecting Registration; Suspension of Right to Make an Advance. The Company will promptly notify the Investor, and confirm
in writing, upon its becoming aware of the occurrence of any of the following events in respect of a Registration Statement or related
Prospectus (such information to be held in strict confidence by Investor until such time as it is publicly disclosed by the Company):
(i) the issuance by the SEC or any other federal governmental authority of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose; or (ii) the happening of any event that makes any statement made in the
Registration Statement or related Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in
any material respect or that requires the making of any changes in the Registration Statement, related Prospectus or documents so that,
in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the related Prospectus,
it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not misleading, or of the necessity to amend
the Registration Statement or supplement a related Prospectus to comply with the Securities Act or any other law (and the Company will
promptly make available to the Investor any such supplement or amendment to the related Prospectus). The Company shall not deliver to
the Investor any Advance Notice, and the Company shall not sell any Shares pursuant to any pending Advance Notice (other than as required
pursuant to Section 2.01), during the continuation of any of the foregoing events (each of the events described in the immediately preceding
clauses (i) through (ii), inclusive, a “Material Outside Event”).
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Section 6.12. Consolidation.
If an Advance Notice has been delivered to the Investor, then the Company shall not effect any consolidation of the Company with or into,
or a transfer of all or substantially all the assets of the Company to another entity before the transaction contemplated in such Advance
Notice has been closed in accordance with Section 2.04 hereof, and all Shares in connection with such Advance have been received by the
Investor.
Section 6.13. Issuance of
the Common Shares. The issuance and sale of the Common Shares to the Investor hereunder shall be made in accordance with the provisions
and requirements of Section 4(a)(2) of the Securities Act and any applicable state securities law.
Section 6.14. Expenses.
The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, will pay all expenses
incident to the preparation, negotiation and execution of this Agreement and the other Transaction Documents and any amendment or modifications
hereto or thereto and the performance of its obligations hereunder or thereunder, including, but not limited to, (i) the preparation,
printing and filing of the Registration Statement and each amendment and supplement thereto, of each Prospectus and of each amendment
and supplement thereto; (ii) the preparation, issuance and delivery of any Shares issued pursuant to this Agreement, (iii) all fees and
disbursements of the Company’s counsel, accountants and other service providers or advisors and the fees and disbursements of any
counsel to the Investor, (iv) the qualification of the Shares under securities laws in accordance with the provisions of this Agreement,
including filing fees in connection therewith, (v) the printing and delivery of copies of any Prospectus and any amendments or supplements
thereto requested by the Investor, (vi) the fees and expenses incurred in connection with the listing or qualification of the Shares for
trading on the Principal Market and (vii) filing fees of the SEC and the Principal Market.
Section 6.15. Current Report.
The Company shall, not later than 9:30 a.m., New York City time, on the first Trading Day following the date of this Agreement, file with
the SEC a Current Report on Form 8-K describing all the material terms of the transactions contemplated by the Transaction Documents in
the form required by the Exchange Act and attaching all the material Transaction Documents (including any exhibits thereto, the “Current
Report”), which Current Report shall include all material, nonpublic information required to be disclosed in connection with
the transactions contemplated by the Transaction Documents. The Company shall provide the Investor and its legal counsel a reasonable
opportunity to comment on a draft of the Current Report prior to filing the Current Report with the SEC and shall give due consideration
to all such comments that are timely received by the Company. Should the Company choose to issue a press release announcing this Agreement,
then such press release shall be issued on the same day the Current Report is filed with the SEC. Until the Current Report is filed with
the SEC, the Company shall not deliver any Advance Notices pursuant to this Agreement. In addition, effective upon the filing of the Current
Report, the Company acknowledges and agrees that any and all confidentiality or similar obligations, whether written or oral, between
the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on the one hand,
and Investor or any of its respective officers, directors, affiliates, employees or agents, on the other hand shall terminate. The Company
shall not, and the Company shall cause each of its Subsidiaries and each of its and their respective officers, directors, employees and
agents not to, provide the Investor with any material, non-public information regarding the Company or any of its Subsidiaries without
the express prior written consent of the Investor (which may be granted or withheld in the Investor’s sole discretion). The Company
understands and confirms that the Investor will rely on the foregoing representations in effecting resales of Shares.
Section 6.16. Use of Proceeds.
The proceeds from any sale of Shares by the Company to the Investor hereunder shall be used by the Company in the manner as will be set
forth in the Prospectus included in any Registration Statement (and any post-effective amendment thereto) and any Prospectus Supplement
thereto filed pursuant to this Agreement, including for working capital purposes for the Company and its Subsidiaries. Neither the Company
nor any Subsidiary will, directly or indirectly, use the proceeds of the transactions contemplated herein to repay any advances or loans
to any executives or employees of the Company or any Subsidiary or to make any payments in respect of any related party obligations, including
without limitation any payables or notes payable to related parties of the Company or any Subsidiary whether or not such amounts are described
on the balance sheets of the Company in any SEC Documents and any Subsidiary or described in any “Related Party Transactions”
section of any SEC Documents.
30
Section 6.17. Market Activities.
Neither the Company, nor any Subsidiary, nor any of their respective officers, directors or controlling persons will, directly or indirectly,
(i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute or result, in the
stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of Common Shares or (ii) sell,
bid for, or purchase Common Shares in violation of Regulation M, or pay anyone any compensation for soliciting purchases of the Shares.
Section 6.18. Trading Information.
On the first Trading Day of each week (provided the Investor sold any shares during the prior week) and otherwise upon the Company’s
reasonable request, the Investor agrees to provide the Company with trading reports setting forth the number and average sales prices
of shares of Common Shares sold by the Investor during the prior trading week.
Section 6.19. Selling Restrictions.
(a) Short
Sales. Except as expressly set forth in this Agreement and subject to Section 6.19(b), the Investor covenants that from and after
the date hereof through and including the Trading Day following the expiration or termination of this Agreement as provided in Section
9.01 (the “Restricted Period”), none of the Investor or any entity managed or directly controlled by the Investor (collectively,
the “Restricted Persons” and each of the foregoing is referred to herein as a “Restricted Person”)
shall, directly or indirectly, (i) engage in any “short sale” (as such term is defined in Rule 200 of Regulation SHO of the
Exchange Act) of the Common Shares, or (ii) engage in any hedging transaction, which establishes a net short position with respect to
the Common Shares, in each case either for its own principal account or for the principal account of any other Restricted Person (each
instance, as applicable, a “Short Sale”). Notwithstanding the foregoing, it is expressly understood and agreed that
nothing contained herein shall (without implication that the contrary would otherwise be true) prohibit any Restricted Person during the
Restricted Period from: (1) selling “long” (as defined under Rule 200 promulgated under Regulation SHO) the Shares; or (2)
selling a number of Common Shares equal to the number of Advance Shares that such Restricted Person is unconditionally obligated to purchase
under a pending Advance Notice but has not yet received from the Company or the transfer agent pursuant to this Agreement.
(b) Notwithstanding
anything to the contrary contained in Section 6.19(a), in the event any Restricted Persons holds any form of security or instrument that
is (or may become) convertible into, or exercisable for, Common Shares (an “Owned Instrument”) than the Restricted
Persons may engage in hedging and/or trading activities (including, without limitation, the location and/or reservation of borrowable
Common Shares) at various times during the period that Owned Instrument remains outstanding, including, without limitation, during the
periods that the value and/or number of the Common Shares underlying the Owned Instrument, as applicable, deliverable with respect to
the Owned Instrument are being determined. The Company acknowledges that such aforementioned hedging and/or trading activities do not
constitute a breach of this Agreement or any other Transaction Document or any of the documents executed in connection herewith or therewith.
Section 6.20. Assignment.
Neither this Agreement nor any rights or obligations of the parties hereto may be assigned to any other Person, provided however that
the Investor may assign its rights and obligations hereunder to an Affiliate.
Section 6.21. No Frustration;
No Variable Rate Transactions, Etc.
(a) No
Frustration. The Company shall not enter into, announce or recommend to its stockholders any agreement, plan, arrangement or transaction
in or of which the terms thereof would restrict, materially delay, conflict with or impair the ability or right of the Company to perform
its obligations under the Transaction Documents to which it is a party, including, without limitation, the obligation of the Company to
deliver the Shares to the Investor in respect of an Advance Notice.
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(b) No
Variable Rate Transactions.
(i) Variable
Rate Transaction. From the date hereof until the earlier of (i) 12 months after the date on which the initial Registration Statement
is declared effective by the SEC and (ii) three (3) months after the date of termination of this Agreement in accordance with Section
9.01 herein (the “Limitation Date”), the Company and each Subsidiary shall be prohibited from effecting or entering
into an agreement to effect any Subsequent Placement of Common Shares or Common Share Equivalents (or a combination thereof) involving
a Variable Rate Transaction, other than in connection with (x) the issuance of Common Shares pursuant to the Helena Agreement, (y) the
issuance of Common Shares pursuant to conversion or otherwise pursuant to the terms of those certain senior secured convertible promissory
notes issued pursuant to that certain securities purchase agreement, dated as of July 16, 2026, by and between the Company and the investor
party thereto, and (z) the issuance of Excluded Securities or with the prior written consent of the Investor. The Investor shall be entitled
to seek injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect
damages, without the necessity of showing economic loss and without any bond or other security being required.
(ii) Notwithstanding
anything herein to the contrary this Section shall not apply to any issuance of Shares pursuant to this Agreement.
Section 6.22. Right of First
Refusal.
(a) During
the Additional Issuance Restricted Period, in the event that the Company receives a Bona Fide Offer (defined below) of a Subsequent Placement,
then the Company must, and irrevocably agrees to, first offer such opportunity to the Investor to provide such capital or financing to
the Company on the same or similar terms as the respective third party’s terms, and the Investor may in its sole discretion determine
whether the Investor will provide such capital or financing for such Subsequent Placement. Upon receipt of the third-party offer, the
Company shall promptly provide notice thereof to the Investor (the “Offer Notice”) and provide copies of the pending
transaction documents. Should the Investor be unwilling or unable to provide such capital or financing to the Company within two (2) Trading
Days from the Investor’s receipt of the Offer Notice from the Company, then the Company may obtain such capital or financing from
such third party on the exact same terms and conditions offered by the Company to the Investor and such transaction must be completed
within seven (7) Trading Days of the date of the Offer Notice. If the Company does not receive the capital or financing from the respective
third party within seven (7) Trading Days of the date of the respective Offer Notice, then the Company must again offer the capital or
financing opportunity to the Investor as described above, and the process detailed above shall be repeated. A “Bona Fide Offer”
is one in which the third party purchaser is irrevocably and contractually bound to purchase the subject securities from the Company,
subject to the Investor’s right of first refusal.
Section 6.23. [Reserved].
Section 6.24. Non-Public Information.
Neither the Company, nor any of their respective directors, officers, employees or agents shall disclose any material non-public information
about the Company to the Investor, unless a simultaneous public announcement thereof is made by the Company in the manner contemplated
by Regulation FD. In the event of a breach of the foregoing covenant by the Company, or any of their respective directors, officers, employees
and agents (as determined in the reasonable good faith judgment of the Investor), (i) the Investor shall promptly provide written notice
of such breach to the Company and (ii) after such notice has been provided to the Company and, provided that the Company shall have failed
to publicly disclose such material, non-public information within 24 hours following demand therefor by the Investor, in addition to any
other remedy provided herein or in the other Transaction Documents, the Investor shall have the right to make a public disclosure, in
the form of a press release, public advertisement or otherwise, of such material, non-public information without the prior approval by
the Company, any of its Subsidiaries, or any of their respective directors, officers, employees or agents. The Investor shall not have
any liability to the Company, any of its Subsidiaries, or any of their respective directors, officers, employees, stockholders or agents,
for any such disclosure. The Company shall not disclose any material non-public information to the Investor without the Investor’s
prior written consent.
32
Section 6.25. Stockholder
Approval. The Company shall provide each stockholder entitled to vote at a meeting of stockholders of the Company (the “Stockholder
Meeting”), which shall be promptly called and held not later than sixty (60) days following the date hereof (the “Stockholder
Meeting Deadline”), a proxy statement in a form reasonably acceptable to the Investor and Sullivan & Worcester LLP, at the
expense of the Company, with the Company obligated to reimburse the expenses of Sullivan & Worcester LLP incurred in connection therewith.
The proxy statement, if any, shall solicit each of its stockholders’ affirmative vote at the Stockholder Meeting for approval of
the proposals (“Stockholder Proposals”) to authorize: (i) the issuance of all of the Shares issuable hereunder in compliance
with the rules and regulations of the Principal Market; and (ii) an amendment to the Company Charter to increase the number of authorized
Common Shares to 1,000,000,000 Common Shares (such affirmative approvals being referred to herein as the “Stockholder Approval”,
and the date such Stockholder Approval is obtained, the “Stockholder Approval Date”), and the Company shall use its
reasonable best efforts to solicit its stockholders’ approval of such proposals and to cause the Board to recommend to the stockholders
that they approve such proposals. The Company shall be obligated to seek to obtain the Stockholder Approval by the Stockholder Meeting
Deadline. If, despite the Company’s reasonable best efforts the Stockholder Approval is not obtained by such Stockholder Approval
Date, the Company shall adjourn and reconvene the Stockholder Meeting at least as often as every seventy-five (75) calendar days thereafter
until such Stockholder Approval is obtained, but in no event later than the three hundred and sixty-fifth (365th) calendar day after the
date hereof. Notwithstanding the foregoing, if the Company is able to obtain the written consent of the stockholders (the “Stockholder
Consent”), the Company may satisfy its obligations under this Section 6.25 by obtaining such consent and filing with the Commission
a Preliminary Information Statement on Schedule 14C no later than ten (10) days prior to the Stockholder Meeting Deadline, followed by
a Definitive Information Statement on Schedule 14C no later than the timeline for such filing prescribed by the Exchange Act; provided,
however, that if the Company receives a notification from the Principal Market that the Stockholder Consent must be modified, then the
Company shall use its best efforts to provide a new Stockholder Consent.
Section 6.26. Reservation.
As of the applicable Closing and on the first day of every calendar quarter beginning after the date hereof, the Company shall have reserved
from its duly authorized shares of capital stock not less than 100% of the Common Shares issuable hereunder, which number of Common Shares
shall be calculated assuming a price per share equal to 80% of the lower of (i) the three (3) day VWAP prior to the measurement date and
(ii) the last closing price per Common Share (the “Reservation Estimate”); provided; however, that if the Company does
not have sufficient authorized Common Shares available for the Reservation Estimate, then the Company shall reserve the maximum amount
available as of the date hereof and shall thereafter increase such reserve amount on the first day of every successive month until the
reserve amount is equal to the Reservation Estimate; provided, further that, without the prior written consent of the Investor, the Company
may not deliver an Advance Notice hereunder if the reserve amount is less than the number of Advance Shares to be purchased in such Advance.
Any consent provided by the Investor pursuant to this Section 6.26 shall only apply to the applicable Advance Notice and shall not be
deemed to be a consent to any additional Advance Notices.
Section 6.27. Market Activities.
The Company will not, directly or indirectly, take any action designed to cause or result in, or that constitutes or might reasonably
be expected to constitute, the stabilization or manipulation of the price of any security of the Company under Regulation M of the Exchange
Act.
Section 6.28. Use of Name.
The Company shall not, directly or indirectly, use the names “[•]”, “[•]”, or any derivations thereof,
or logos associated with these names, as the case may be, in any manner or take any action that may imply any relationship with the Investor
or any of its Affiliates without the prior written consent of the Investor, provided, however, the Investor hereby consents to all lawful
uses of these names in the prospectus, statement and other materials that are required by applicable laws or pursuant to the disclosure
requirements of the SEC or any state securities authority.
Section 6.29. Change in Transfer
Agent. The Company agrees that in the event the Transfer Agent resigns, or is terminated by the Company, as the Company’s transfer
agent, the Company shall promptly provide written notice to the Investor of such resignation or termination and shall engage a replacement
transfer agent that is acceptable to the Investor at the Investor’s sole discretion within five (5) Trading Days of the receipt
of such written delivery. The Company shall not be eligible to deliver an Advance Notice until such successor transfer agent has been
approved by the Investor and appointed by the Company.
33
Article VII. Non-Exclusive Agreement.
Section 7.01. Except as provided
herein, this Agreement and the rights awarded to the Investor hereunder are non-exclusive, and the Company may, at any time throughout
the term of this Agreement and thereafter, issue and allot, or undertake to issue and allot, to any person or persons any shares and/or
securities and/or convertible notes, bonds, debentures, options to acquire shares or other securities and/or other facilities which may
be converted into or replaced by Common Shares or other securities of the Company, and to extend, renew and/or recycle any bonds and/or
debentures, and/or grant any rights with respect to its existing and/or future shares of capital stock.
Article VIII. Choice of Law/Jurisdiction
Section 8.01. This
Agreement, and any and all claims, proceedings or causes of action relating to this Agreement or arising from this Agreement or the transactions
contemplated herein, including, without limitation, tort claims, statutory claims and contract claims, shall be interpreted, construed,
governed and enforced under and solely in accordance with the substantive and procedural laws of the State of Nevada, in each case as
in effect from time to time and as the same may be amended from time to time, and as applied to agreements performed wholly within the
State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether the State of Nevada, or any
other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Nevada. The Parties further
agree that any action between them shall be heard in the state and federal courts sitting in the City of Las Vegas, County of Clark, and
expressly consent to the jurisdiction and venue of the state and federal courts sitting in the City of Las Vegas, County of Clark, for
the adjudication of any civil action asserted pursuant to this Agreement.
EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREIN, THE PERFORMANCE THEREOF OR THE FINANCINGS CONTEMPLATED
HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTY HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS PARAGRAPH.
Article IX. Termination
Section 9.01. Termination.
(a) Unless
earlier terminated as provided hereunder, this Agreement shall terminate automatically on the earliest of (i) the first day of the next
month following the 24-month anniversary of the Effective Date, (ii) the date on which the Investor shall have made payment of Advances
pursuant to this Agreement for Common Shares equal to the Commitment Amount and all Advance Shares have been delivered, and (iii) the
date on which the Company announces or publicly discloses a material restatement of its financial statements for two (2) or more fiscal
quarters (the “Lapsed Registration Termination”). The Investor may terminate this Agreement at any time at the Investor’s
sole option if the Registration Statement is not declared effective by the one hundred and twentieth (120th) day following the date hereof.
34
(b) The
Company may terminate this Agreement effective upon five (5) Trading Days’ prior written notice to the Investor; provided that there
are no outstanding Advance Notices, the Common Shares under which have yet to be issued. Following the effectiveness of a Registration
Statement, the Investor may terminate this Agreement effectively immediately if the effectiveness of such Registration Statement, or any
post-effective amendment thereto, lapses for any reason (including, without limitation, the issuance of a stop order by the Commission)
or such Registration Statement or any post-effective amendment thereto, the Prospectus contained therein or any Prospectus Supplement
thereto otherwise becomes unavailable to the Investor for the resale of all of the Registrable Securities included therein in accordance
with the terms of the Registration Rights Agreement, and such lapse or unavailability continues for a period of ten (10) consecutive Trading
Days or for more than an aggregate of twenty (20) Trading Days in any 365-day period. This Agreement may be terminated at any time by
the mutual written consent of the parties, effective as of the date of such mutual written consent unless otherwise provided in such written
consent.
(c) Nothing
in this Section 9.01 shall be deemed to release the Company or the Investor from any liability for any breach under this Agreement, or
to impair the rights of the Company and the Investor to compel specific performance by the other party of its obligations under this Agreement.
The indemnification provisions contained in Article V shall survive termination hereunder.
Article X. Notices
Other than with respect to Advance
Notices, which must be in writing and will be deemed delivered on the day set forth in Section 2.01(b), any notices, consents, waivers,
or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have
been delivered (a) upon receipt, when delivered personally; (b) upon receipt, when sent by e-mail to all addresses noted below if sent
on a Trading Day, or, if not sent on a Trading Day, on the immediately following Trading Day; (c) 5 days after being sent by U.S. certified
mail, return receipt requested, (d) one day after deposit with a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses for such communications (except for Advance Notices which shall be delivered
in accordance with Exhibit B hereof) shall be:
If to the Company, to:
Sadot Group Inc.
295 E. Renfro St., Suite 300
Burleson, Texas 76028
Telephone: (832) 604-9568
Attention: Haggai Ravid, Chief Executive Officer
E-Mail: haggai.ravid@sadotco.com
With a copy to (which shall not
Fleming PLLC
constitute notice or delivery of process) to:
30 Wall Street, 8th Floor
New York, New York 10005
Telephone: (516) 833-5034
Attention: Stephen M. Fleming, Esq.
E-Mail: smf@flemingpllc.com
If to the Investor(s):
[•]
Attn: [•]
Telephone: [•]
Email: [•]
With a copy (which shall not
Sullivan & Worcester LLP
constitute notice or delivery
1251 Avenue of the Americas
of process) to:
New York, New York 10020
Attn: David Danovitch, Esq.
Telephone: (212) 660-3060
Email: ddanovitch@sullivanlaw.com
35
or at such other address and/or e-mail and/or to the
attention of such other person as the recipient party has specified by written notice given to each other party three Trading Days prior
to the effectiveness of such change. Written confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other
communication, (ii) electronically generated by the sender’s email service provider containing the time, date, recipient email address
or (iii) provided by a nationally recognized overnight delivery service shall be rebuttable evidence of personal service in accordance
with clause (i), (ii) or (iii) above, respectively.
Article XI. Miscellaneous
Section 11.01. Counterparts.
This Agreement may be executed in identical counterparts, both which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party. Facsimile or other electronically scanned and delivered
signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the
Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be
deemed to have been duly and validly delivered and be valid and effective for all purposes of this Agreement.
Section 11.02. Entire Agreement;
Amendments. This Agreement supersedes all other prior oral or written agreements between the Investor, the Company, their respective
affiliates and persons acting on their behalf with respect to the matters discussed herein, and this Agreement contains the entire understanding
of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor the Investor
makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived
or amended other than by an instrument in writing signed by the parties to this Agreement.
Section 11.03. Reporting Entity
for Common Shares. The reporting entity relied upon for the determination of the trading price or trading volume of the Common Shares
on any given Trading Day for the purposes of this Agreement shall be the Reporting Service or any successor thereto. The written mutual
consent of the Investor and the Company shall be required to employ any other reporting entity.
Section 11.04. Fees and Expenses.
The Company shall reimburse the Investor for all legal fees and expenses and reasonable costs and expenses incurred by it or its affiliates
in connection with the structuring, documentation, diligence, negotiation, applicable closing and post-closing, as applicable, including
related amendments, waivers, enforcement actions, compliance checks or legal audits, of the transactions contemplated by the Transaction
Documents irrespective of whether or not any Closings occur (including, without limitation, as applicable, any other reasonable and documented
fees and expenses in connection with the structuring, documentation, negotiation and closing of the transactions contemplated by the Transaction
Documents and due diligence and regulatory filings in connection therewith) (the “Transaction Expenses”); provided,
however, that the total reimbursement of legal expenses to Sullivan & Worcester LLP for expenses incurred with respect to the preparation
of the Transaction Documents and not including any legal expenses incurred from any amendments, waivers or modifications to the Transaction
Documents, shall not exceed $40,000, and such Transaction Expenses not otherwise paid by the Company shall be withheld by the Investor
from its Aggregate Purchase Price at each applicable Closing; provided, that the Company shall promptly reimburse Sullivan & Worcester
LLP (and/or the Investor, as applicable) on demand for all Transaction Expenses applicable thereto in accordance hereto not so reimbursed
through such withholding at such applicable Closing. The Company shall be responsible for the payment of any placement agent’s fees,
financial advisory fees, transfer agent fees, the Depository Trust Company (“DTC”) fees or broker’s commissions
(other than for Persons engaged by the Investor) relating to or arising out of the transactions contemplated hereby. The Company shall
pay, and hold the Investor harmless against, any liability, loss or expense (including, without limitation, reasonable attorneys’
fees and out-of-pocket expenses) arising in connection with any claim relating to any such payment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
36
IN WITNESS WHEREOF, the
parties hereto have caused this Equity Purchase Facility Agreement to be executed by the undersigned, thereunto duly authorized, as of
the date first set forth above.
COMPANY:
SADOT GROUP INC.
By:
Name:
Title:
INVESTOR:
[•]
By:
Name:
Title:
[Signature Page to Equity
Purchase Facility Agreement]
37
ANNEX I TO THE
EQUITY PURCHASE FACILITY AGREEMENT
CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY
TO DELIVER AN ADVANCE NOTICE
The right of the Company to deliver an Advance Notice
and the obligations of the Investor hereunder with respect to an Advance are subject to the satisfaction or waiver, on each Advance Notice
Date (a “Condition Satisfaction Date”), of each of the following conditions:
(a) Accuracy of the Company’s Representations and Warranties. The representations and warranties
of the Company in the Agreement, of which this Annex I is attached shall be true and correct in all material respects as of the Advance
Notice Date, except to the extent such representations and warranties are as of another date, such representations and warranties shall
be true and correct as of such other date.
(b) Registration of the Shares with the SEC. There is an effective Registration Statement pursuant
to which the Investor is permitted to utilize the Prospectus thereunder to resell all of the Shares issuable pursuant to such Advance
Notice.
(c) Public Information. The Current Report shall have been filed with the SEC and the Company shall
have filed with the SEC in a timely manner all reports, notices and other documents required under the Exchange Act and applicable SEC
regulations during the twelve-month period immediately preceding the applicable Condition Satisfaction Date.
(d) Authority. The Company shall have obtained all permits and qualifications required by any applicable
state for the offer and sale of all the Common Shares issuable pursuant to such Advance Notice, or shall have the availability of exemptions
therefrom. The sale and issuance of such Common Shares shall be legally permitted by all laws and regulations to which the Company is
subject.
(e) Board. The board of directors of the Company shall have approved the transactions contemplated
by the Transaction Documents; said approval has not been amended, rescinded or modified and remains in full force and effect as of the
date hereof, and a true, correct and complete copy of such resolutions duly adopted by the board of directors of the Company shall have
been provided to the Investor.
(f) No Material Outside Event. No Material Outside Event shall have occurred and be continuing.
(g) Performance by the Company. The Company shall have performed, satisfied and complied in all material
respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company
at or prior the applicable Condition Satisfaction Date including, without limitation, the delivery of all Common Shares issuable pursuant
to all previously delivered Advance Notices.
(h) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits or
directly, materially and adversely affects any of the transactions contemplated by this Agreement.
(i) No Suspension of Trading in or Delisting of Common Shares. The Advance Shares have been approved
for trading on the Principal Market, subject to official notice of issuance. Trading in the Common Shares shall not have been suspended
by the SEC, the Principal Market or FINRA, the Company shall not have received any final and non-appealable notice that the listing or
quotation of the Common Shares on the Principal Market shall be terminated on a date certain (unless, prior to such date certain, the
Common Shares is listed on any subsequent Principal Market), nor shall there have been imposed any suspension of, or restriction on, accepting
additional deposits of the Common Shares, electronic trading or book-entry services by the DTC with respect to the Common Shares that
is continuing, the Company shall not have received any notice from DTC to the effect that a suspension of, or restriction on, accepting
additional deposits of the Common Shares, electronic trading or book-entry services by DTC with respect to the Common Shares is being
imposed or is contemplated (unless, prior to such suspension or restriction, DTC shall have notified the Company in writing that DTC has
determined not to impose any such suspension or restriction).
38
(j) Authorized. All of the Shares issuable pursuant to the applicable Advance Notice shall have been
duly authorized by all necessary corporate action of the Company. All Shares relating to all prior Advance Notices required to have been
received by the Investor under this Agreement shall have been delivered to the Investor in accordance with this Agreement.
(k) Advance Notice. The representations contained in the applicable Advance Notice shall be true and
correct in all material respects as of the applicable Condition Satisfaction Date.
(l) Consecutive Advance Notices. Unless the Investor consents in writing (which may be by e-mail at
any time prior to the expiration of the Pricing Period for such applicable Additional Notices), the Pricing Period for all prior Advances
has been completed and settled.
(m) Stockholder Approval. The Company shall have obtained Stockholder Approval.
(n) Material Adverse Effect. No Material Adverse Effect shall have occurred and be continuing.
(o) Delivery. Furthermore, the Company shall not have the right to deliver an Advance Notice to the
Investor if any of the following shall occur:
(i) the Company breaches any representation or warranty in any material respect, or breaches any covenant
or other term or condition under any Transaction Document in any material respect;
(ii) if any Person commences a proceeding against the Company pursuant to or within the meaning of any Bankruptcy
Law for so long as such proceeding is not dismissed;
(iii) if the Company is at any time insolvent, or, pursuant to or within the meaning of any Bankruptcy Law,
(1) commences a voluntary case, (2) consents to the entry of an order for relief against it in an involuntary case, (3) consents to the
appointment of a Custodian of it or for all or substantially all of its property, or (4) makes a general assignment for the benefit of
its creditors or (5) the Company is generally unable to pay its debts as the same become due;
(iv) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that (1) is for relief
against the Company in an involuntary case, (2) appoints a Custodian of the Company or for all or substantially all of its property, or
(3) orders the liquidation of the Company or any Subsidiary for so long as such order, decree or similar action remains in effect; or
(v) if at any time the Company is not eligible or is unable to transfer its Shares to Investor, including,
without limitation, electronically through FAST.
(p) Non-Public
Information. The Investor shall have neither received, nor be in possession of, any material, non-public information regarding the
Company or any of its Subsidiaries.
39
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
(See Attached)
EXHIBIT B
ADVANCE NOTICE
VIA EMAIL TO ALL
[•]
Date: _____________________
Advance Notice Number: _________________________
The undersigned, _______________________, hereby certifies,
with respect to the sale of Common Shares of Sadot Group Inc. (the “Company”) issuable in connection with this Advance
Notice, delivered pursuant to that certain Equity Purchase Facility Agreement, dated as of July 16, 2026 (the “Agreement”),
as follows (with capitalized terms used herein without definition having the same meanings as given to them in the Agreement):
1. Authorization:
The undersigned is the duly elected ________________________ of the Company.
2. Registration:
There are no fundamental changes to the information set forth in the Registration Statement which would require the Company to file a
post-effective amendment to the Registration Statement.
3. Conditions
Precedent Compliance: The Company has performed in all material respects all covenants and agreements to be performed by the Company
contained in this Agreement on or prior to the Advance Notice Date. All conditions to the delivery of this Advance Notice are satisfied
as of the date hereof.
4. Common
Shares Outstanding: The number of Common Shares outstanding as of the date hereof is __________________.
5. Advance
Amount: The number of Advance Shares the Company is requesting is _____________________.
6. Pricing
Period: This is an Advance Notice for a(n) _________________[1]
Pricing Period.
7. Automatic
Pricing Period Adjustment: If this Advance Notice is for an Accelerated Pricing Period, Extended Pricing Period or Overtime Pricing
Period delivered in accordance with Section 2.01(b)(v) of the Agreement and the Investor has not sent an Advance Notice Confirmation prior
to the Confirmation Deadline, the Company hereby ____________[2]
elect(s) to rescind this Advance Notice after the expiration of the Confirmation Deadline (if not rescinded, this Advance Notice will
automatically transfer the Pricing Period selection to a Regular Purchase Pricing Period, with the Pricing Period starting at the beginning
of Regular Trading Hours on the Trading Day immediately succeeding the Confirmation Deadline).
The undersigned has executed this Advance Notice
as of the date first set forth above.
SADOT GROUP INC.
By:
[1]
Select either a Regular, Accelerated, Extended or Overtime Purchase Pricing Period.
[2]
Enter “does not” If the Company wishes not to rescind, otherwise, if left blank, the Company has elected to rescind.
EXHIBIT C
SETTLEMENT DOCUMENT
VIA EMAIL
Sadot Group Inc.
Attn: Haggai Ravid, Chief Executive Officer
Email: haggai.ravid@sadotco.com
Advance Notice Date: _______________, 202__
Below please find the settlement information with respect to the Advance Notice Number:
1.
Number of Common Shares requested in the Advance Notice:
2.
Number of Excluded Days (if any):
3.
Volume Threshold Adjusted Advance Amount:
4.
Halt Adjusted Advance Amount:
5.
Adjusted Advance Amount (the lesser of (i) row 1, and (ii) the greater of (A) row 3, and (B) row 4):
6.
Market Price:
$
7.
Purchase Price per share:
$
8.
Aggregate Purchase Price due to Company (row 5 multiplied by row 7):
$
Please issue the number of Advance Shares due to the Investor to the
account of the Investor as follows:
Investor’s DTC participant #:
ACCOUNT NAME:
ACCOUNT NUMBER:
ADDRESS:
CITY:
COUNTRY:
Contact person:
Number and/or email:
Sincerely,
[__]
Agreed and approved By:
SADOT GROUP INC.:
___________________________________
Name:
Title:
EX-10.7 — EXHIBIT 10.7
EX-10.7
Filename: e7788_ex10-7.htm · Sequence: 11
EXHIBIT 10.7
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as of July 16, 2026, is made by and between [•], a Delaware limited liability company
(the “Investor”), and SADOT GROUP INC., a Nevada corporation (the “Company”). The Investor and the
Company may be referred to herein individually as a “Party” and collectively as the “Parties”.
WHEREAS, the Company and
the Investor have entered into that certain Equity Purchase Facility Agreement, dated as of the date hereof (the “Purchase Agreement”),
pursuant to which the Company may issue, from time to time, to the Investor up to $100.0 million of newly issued Common Stock (as defined
below) (the “Common Shares”); and
WHEREAS, pursuant to the
terms of, and in consideration for the Investor entering into, the Purchase Agreement, and to induce the Investor to execute and deliver
the Purchase Agreement, the Company has agreed to provide the Investor with certain registration rights under the Securities Act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the “Securities Act”).
AGREEMENT
NOW, THEREFORE, in consideration
of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investor hereby agree as follows:
1. DEFINITIONS.
Capitalized terms used herein
and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:
(a) “Business
Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday in the United States or a day
on which the Federal Reserve Bank of New York is closed and/or any of the following exchanges on which the Common Stock is traded and
listed, or any successor(s) thereto, is not open for at least five (5) hours of trading: the Nasdaq Capital Market; the Nasdaq Global
Market; the Nasdaq Global Select Market, the New York Stock Exchange; or the NYSE American; and any successor to any of the foregoing
markets or exchanges.
(b) “Common
Stock” means (x) the Company’s common stock, par value $0.0001 per share, and (y) any shares of capital stock into which
such common stock shall have been changed or any shares of capital stock resulting from a reclassification of such common stock.
(c) “Effectiveness
Deadline” means, with respect to the initial Registration Statement filed hereunder, the 60th calendar day following
the date such initial Registration Statement is filed, provided, however, in the event the Company is notified by the U.S. Securities
and Exchange Commission (“SEC”) that the Registration Statement will not be reviewed or is no longer subject to further
review and comments, the Effectiveness Deadline as to such Registration Statement shall be the fifth Business Day following the date on
which the Company is so notified if such date precedes the date required above. Notwithstanding the foregoing, in the event the Registration
Statement is subject to a full SEC review, or the Company is required to update the financial statements therein, which causes the Registration
Statement not to be declared effective by the Effectiveness Deadline, the Effectiveness Deadline shall automatically be deemed to be extended
for so long as necessary provided that the Company is using its best efforts to promptly respond and satisfy the requests of the SEC,
and during such period, the Company shall not be deemed to be in default of satisfying the Effectiveness Deadline.
1
(d) “Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(e) “Filing
Deadline” means, with respect to the initial Registration Statement required hereunder, the 45th calendar day following
the date hereof.
(f) “Person”
means a corporation, a limited liability company, an association, a partnership, an organization, a business, an individual, a governmental
or political subdivision thereof or a governmental agency.
(g) “Prospectus”
means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously
omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.
(h) “Registrable
Securities” means all of (i) the Common Shares, and (ii) any shares of capital stock issued or issuable with respect to the
Common Shares, including, without limitation, (1) as a result of any stock split, stock dividend or other distribution, recapitalization
or similar event or otherwise, and (2) shares of capital stock of the Company into which the Common Shares are converted or exchanged
and shares of capital stock of a successor entity into which the Common Shares are converted or exchanged.
(i) “Registration
Statement” means any registration statement of the Company filed pursuant to this Agreement, including the Prospectus, amendments
and supplements to such registration statement or Prospectus, including post-effective amendments, all exhibits thereto, and all material
incorporated by reference or deemed to be incorporated by reference in such registration statement.
(j) “Rule
144” means Rule 144 under the Securities Act or any successor rule thereto.
(k) “Rule
415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the SEC having substantially the same purpose and effect as such Rule.
(l) “SEC”
means the Securities and Exchange Commission or any other federal agency administering the Securities Act and the Exchange Act at the
time.
(m) “Securities
Act” shall have the meaning set forth in the Recitals above.
2. REGISTRATION.
(a) The
Company’s registration obligations set forth in this Section 2 including its obligations to file Registration Statements, obtain
effectiveness of Registration Statements, and maintain the continuous effectiveness of any Registration Statement that has been declared
effective shall begin on the date hereof and continue until the earlier of (i) the date on which the Investor has sold all of the Registrable
Securities, (ii) the date of termination of the Purchase Agreement if as of such termination date the Investor holds no Registerable Securities
and (iii) the date on which all of the Registrable Securities have been sold or may be sold without any restriction pursuant to Rule 144
as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s
transfer agent (the “Registration Period”).
2
(b) Subject
to the terms and conditions of this Agreement, the Company shall (i) as soon as practicable, but in no case later than the Filing Deadline,
prepare and file with the SEC an initial Registration Statement on Form S-3 (or, if the Company is not then eligible, on Form S-1) or
any successor form thereto covering the resale by the Investor of the maximum number of Registrable Securities as shall be permitted to
be included thereon in accordance with applicable SEC rules, regulations and interpretations so as to permit the resale of such Registrable
Securities by the Investor under Rule 415 at then prevailing market prices (and not fixed prices). The Registration Statement shall contain
“Selling Stockholders” and “Plan of Distribution” sections. The Company shall use its best efforts
to have the Registration Statement declared effective by the SEC as soon as practicable, but in no event later than the Effectiveness
Deadline. By 9:30 am, Eastern Time, on the Business Day following the date of effectiveness, the Company shall file with the SEC in accordance
with Rule 424 under the Securities Act the final Prospectus to be used in connection with sales pursuant to such Registration Statement.
Prior to the filing of the Registration Statement with the SEC, the Company shall furnish a draft of the Registration Statement to the
Investor for their review and comment. The Investor shall furnish comments on the Registration Statement to the Company within 24 hours
of the receipt thereof from the Company.
(c) Sufficient
Number of Shares Registered. If at any time during the Registration Period, all Registrable Securities are not covered by a Registration
Statement filed pursuant to Section 2(a) as a result of Section 2(e) or otherwise, the Company shall use its best efforts to file with
the SEC one or more additional Registration Statements so as to cover all of the Registrable Securities not covered by such initial Registration
Statement, in each case as soon as practicable (taking into account any position of the staff of the SEC with respect to the date on which
the Staff will permit such additional Registration Statement(s) to be filed with the SEC and the rules and regulations of the SEC). The
Company shall use its best efforts to cause each such new Registration Statement to become effective as soon as reasonably practicable
following the filing thereof with the SEC.
(d) During
the Registration Period, the Company shall (i) promptly prepare and file with the SEC such amendments (including post-effective amendments)
and supplements to a Registration Statement and the Prospectus used in connection with a Registration Statement, which Prospectus is to
be filed pursuant to Rule 424 promulgated under the Securities Act, as may be necessary to keep such Registration Statement effective
at all times during the Registration Period, (ii) prepare and file with the SEC additional Registration Statements in order to register
for resale under the Securities Act all of the Registrable Securities; (iii) cause the related Prospectus to be amended or supplemented
by any required Prospectus supplement (subject to the terms of this Agreement), and as so supplemented or amended to be filed pursuant
to Rule 424; (iv) respond as promptly as reasonably possible to any comments received from the SEC with respect to a Registration Statement
or any amendment thereto and as promptly as reasonably possible provide the Investor true and complete copies of all correspondence from
and to the SEC relating to a Registration Statement (provided that the Company may excise any information contained therein which would
constitute material non-public information as to any Investor which has not executed a confidentiality agreement with the Company); and
(v) comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in such Registration Statement. In the case of amendments
and supplements to a Registration Statement which are required to be filed pursuant to this Agreement (including pursuant to this Section
2(d)) by reason of the Company’s filing an Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Reports on Form
8-K or any analogous report under the Exchange Act, the Company shall incorporate such report by reference into the Registration Statement,
if applicable, or shall file such amendments or supplements with the SEC on the same day on which the Exchange Act report is filed which
created the requirement for the Company to amend or supplement the Registration Statement.
3
(e) Reduction
of Registrable Securities Included in a Registration Statement. Notwithstanding anything contained herein, in the event that the SEC
requires the Company to reduce the number of Registrable Securities to be included in a Registration Statement in order to allow the Company
to rely on Rule 415 with respect to a Registration Statement, then the Company shall reduce the number of Registrable Securities to be
included in such Registration Statement (after consultation with the Investor as to the specific Registrable Securities to be removed
therefrom) to the maximum number of securities as is permitted to be registered by the SEC. In the event of any reduction in Registrable
Securities pursuant to this paragraph, the Company shall use its best efforts to file one or more New Registration Statements with the
Commission in accordance with Section 2(c) until such time as all Registrable Securities have been included in Registration Statements
that have been declared effective and the Prospectuses contained therein are available for use by the Investor.
(f) Failure
to File or Obtain Effectiveness of the Registration Statement or Remain Current; Partial Liquidated Damages. If: (i) a Registration
Statement is not filed on or prior to the Filing Deadline, or (ii) a Registration Statement is not declared effective on or prior to the
Effectiveness Deadline, or the Company fails to file with the SEC a request for acceleration in accordance with Rule 461 promulgated under
the Securities Act, within five Business Days of the date that the Company is notified (orally or in writing, whichever is earlier) by
the SEC that a Registration Statement will not be “reviewed,” or not subject to further review, or (iii) after the effectiveness,
a Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities for which it is required
to be effective, or (iv) the Investor is not permitted to utilize the Prospectus therein to resell such Registrable Securities for more
than 30 consecutive calendar days or more than an aggregate of 60 calendar days during any 12-month period (which need not be consecutive
calendar days), or (v) if after the date that is six months from the date hereof, the Company does not have available adequate current
public information as set forth in Rule 144(c) (any such failure or breach being referred to as an “Event” and the
date of any such Event, the “Event Date”), then in addition to any other rights the Investor may have hereunder or
under applicable law, the Company shall be in breach of the term and conditions of this Agreement and such Event shall be deemed an event
of default for so long as such Event remains uncured. During the period of the existence of an uncured Event, the Investor shall have
no obligation to accept an Advance Notice or accept or purchase any Advance Shares (other than any Advance Shares purchased by the Investor
prior to the occurrence of the Event). In addition, on each such Event Date and on each monthly anniversary of each such Event Date thereafter
(if the applicable Event shall not have been cured by such date) or any pro rata portion thereof, until the applicable Event is cured
or sixty (60) calendar days after the applicable Event Date, whichever occurs first, the Company shall pay to the Investor an amount in
cash, as partial liquidated damages and not as a penalty, equal to the product of two percent (2.0%) multiplied by the total purchase
price of each outstanding Advance Notice (other than the purchase price for any Advance Shares purchased by the Investor prior to the
occurrence of the Event); provided, that the maximum aggregate amount payable thereunder shall not exceed 4% of such amount. For example,
if the total purchase price of all outstanding Advance Notices (other than the purchase price for any Advance Shares purchased by the
Investor prior to the occurrence of the Event) is $1,000,000 at an Event Date which shall occur after the date hereof, then, on the Event
Date and on each monthly anniversary of such Event Date thereafter (if the applicable Event shall not have been cured by such date) the
Company shall pay partial liquidated damages on such amount equal to $20,000, up to an aggregate of $40,000. If the Company fails to pay
any partial liquidated damages pursuant to this Section 2(f) in full within seven (7) calendar days after the date payable, the Company
shall pay interest thereon at a rate of eighteen percent (18%) per annum (or such lesser maximum amount that is permitted to be paid by
applicable regulation) to the Investor, accruing daily from the date such partial liquidated damages are due until such amounts, plus
all such interest thereon, are paid in full.
4
(g) Piggy-Back
Registrations. Commencing on the Filing Deadline, if at any time there is not an effective Registration Statement covering all of
the Registrable Securities and the Company proposes to register the offer and sale of any shares of Common Stock under the Securities
Act (other than a registration (i) pursuant to a registration statement on Form S-8 ((or other registration solely relating to an offering
or sale to employees or directors of the Company pursuant to any employee stock plan or other employee benefit arrangement), (ii) pursuant
to a registration statement on Form S-4 (or similar form that relates to a transaction subject to Rule 145 under the Securities Act or
any successor rule thereto), or (iii) in connection with any dividend or distribution reinvestment or similar plan), whether for its own
account or for the account of one or more stockholders of the Company and the form of registration statement to be used may be used for
any registration of Registrable Securities, the Company shall give prompt written notice (in any event no later than five days prior to
the filing of such registration statement) to the holders of Registrable Securities of its intention to effect such a registration and,
shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion
from the holders of Registrable Securities; provided, however, that, the Company shall not be required to register any Registrable
Securities pursuant to this Section 2(g) that have been sold or may be sold without any restrictions pursuant to Rule 144, as determined
by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company’s transfer
agent.
(h) No
Inclusion of Other Securities. Except for the shares of Common Stock issuable pursuant to conversion, or otherwise pursuant to the
terms of certain senior secured convertible notes pursuant to that certain Securities Purchase Agreement entered into between the Company
and the investor signatory thereto, dated as of July 16, 2026, in no event shall the Company include any securities other than Registrable
Securities in any Registration Statement pursuant to Section 2(a) or Section 2(c) without obtaining the prior written consent of the Investor
prior to filing such Registration Statement with the SEC.
3. RELATED OBLIGATIONS.
(a) The
Company shall, not less than three Business Days prior to the filing of each Registration Statement and not less than one Business Day
prior to the filing of any related amendments and supplements to all Registration Statements (except for Annual Reports on Form 10-K,
supplements and amendments to update the Registration Statement solely for information reflected in the Company’s Annual Reports
on Form 10-K, Quarterly Report on Form 10-Q or Current Reports on Form 8-K), furnish to the Investor copies of all such documents proposed
to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the reasonable
and prompt review of such Investor. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements
thereto to which the Investor shall reasonably object in good faith.
(b) The
Company shall furnish to the Investor whose Registrable Securities are included in any Registration Statement, without charge (i) at least
one copy (which may be in electronic form) of such Registration Statement as declared effective by the SEC and any amendment(s) thereto,
including financial statements and schedules, all documents incorporated therein by reference, all exhibits and each preliminary prospectus,
(ii) at least one copy (which may be in electronic form) of the final prospectus included in such Registration Statement and all amendments
and supplements thereto, and (iii) any documents, which are not publicly available through EDGAR, as such Investor may reasonably request
from time to time in order to facilitate the disposition of the Registrable Securities owned by such Investor.
5
(c) The
Company shall use its best efforts to (i) register and qualify the Registrable Securities covered by a Registration Statement under such
other securities or “blue sky” laws of such jurisdictions in the United States as any Investor reasonably requests, (ii) prepare
and file in those jurisdictions, such amendments (including post-effective amendments) and supplements to such registrations and qualifications
as may be necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such other actions as may be necessary
to maintain such registrations and qualifications in effect at all times during the Registration Period, and (iv) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto to (w) make any change to its articles of incorporation or by-laws,
(x) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(c), (y) subject
itself to general taxation in any such jurisdiction, or (z) file a general consent to service of process in any such jurisdiction. The
Company shall promptly notify the Investor who holds Registrable Securities of the receipt by the Company of any notification with respect
to the suspension of the registration or qualification of any of the Registrable Securities for sale under the securities or “blue
sky” laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.
(d) As
promptly as practicable after becoming aware of such event or development, the Company shall notify the Investor in writing of the happening
of any event as a result of which the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement
of a material fact or omission to state a material fact required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (provided that in no event shall such notice contain any material,
nonpublic information), and promptly prepare a supplement or amendment to such Registration Statement to correct such untrue statement
or omission and deliver one electronic copy of such supplement or amendment to the Investor. The Company shall also promptly notify the
Investor in writing (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and when a Registration
Statement or any post-effective amendment has become effective (notification of such effectiveness shall be delivered to the Investor
by email on the same day of such effectiveness), (ii) of any request by the SEC for amendments or supplements to a Registration Statement
or related prospectus or related information, and (iii) of the Company’s reasonable determination that a post-effective amendment
to a Registration Statement would be appropriate. The Company shall respond as promptly as reasonably practicable to any comments received
from the SEC with respect to a Registration Statement or any amendment thereto.
(e) The
Company shall use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction within the United States of America
and, if such an order or suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible moment and
to notify the Investor who holds Registrable Securities being sold of the issuance of such order and the resolution thereof or its receipt
of actual notice of the initiation or threat of any proceeding for such purpose.
(f) Without
limiting any obligation of the Company under the Purchase Agreement, the Company shall use best efforts to cause all of the Registrable
Securities covered by each Registration Statement to be listed on the Principal Market. The Company shall pay all fees and expenses in
connection with satisfying its obligation under this Section 3(f).
6
(g) The
Company shall hold in confidence and not make any disclosure of information concerning the Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal or state securities laws, (ii) the disclosure of such information is
necessary to avoid or correct a misstatement or omission in any Registration Statement, (iii) the release of such information is ordered
pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement.
The Company agrees that it shall, upon learning that disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give prompt written notice to such Investor and allow such Investor,
at the Investor’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.
(h) The
Company shall cooperate with the holders of the Registrable Securities to facilitate the timely preparation and delivery of certificates
representing the Registrable Securities to be sold pursuant to such Registration Statement or Rule 144 and representing such number of
Common Shares and registered in such names as the holders of the Registrable Securities may reasonably request a reasonable period of
time prior to sales of Registrable Securities pursuant to such Registration Statement or Rule; provided, that the Company may satisfy
its obligations hereunder without issuing physical stock certificates through the issuance of the Registrable Securities in book entry
form.
(i) The
Company shall use its best efforts to cause the Registrable Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary to consummate the disposition of such Registrable Securities.
(j) The
Company shall otherwise use its best efforts to comply with all applicable rules and regulations of the SEC in connection with any registration
hereunder.
(k) Within
two Business Days after a Registration Statement which covers Registrable Securities is declared effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with copies
to the Investor) an opinion of legal counsel for the Company stating that such Registrable Securities are registered for resale pursuant
to such Registration Statement that has been declared effective by the SEC and that, in connection with a resale of any Common Shares
pursuant to such Registration Statement, the Common Shares shall be transferred free of any restrictive legends.
(l) The
Company shall take all other reasonable actions necessary to expedite and facilitate disposition by the Investor of Registrable Securities
pursuant to a Registration Statement.
4. OBLIGATIONS OF THE INVESTOR.
(a) The
Investor agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 3(d)
such Investor shall as soon as reasonably practicable discontinue disposition of Registrable Securities pursuant to any Registration Statement
covering such Registrable Securities until the Investor’s receipt of the copies of the supplemented or amended prospectus contemplated
by Section 3(d) or receipt of notice that no supplement or amendment is required. Notwithstanding anything to the contrary, subject to
compliance with the securities laws, the Company shall cause its transfer agent to deliver unlegended certificates for Common Shares to
a transferee of an Investor in accordance with the terms of the Purchase Agreement in connection with any sale of Registrable Securities
with respect to which an Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from the Company
of the happening of any event of the kind described in Section 3(d) and for which the Investor has not yet settled.
7
(b) The
Investor covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it
or an exemption therefrom in connection with sales of Registrable Securities pursuant to the Registration Statement.
(c) The
Investor, by its acceptance of the Registrable Securities, agrees to cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of each Registration Statement hereunder, unless the Investor has notified the Company in
writing of the Investor’s election to exclude all of the Investor’s Registrable Securities from such Registration Statement.
5. EXPENSES OF REGISTRATION.
All expenses incurred by the Company
in complying with its obligations pursuant to this Agreement and in connection with the registration and disposition of Registrable Securities
shall be paid by the Company, including, without limitation, all registration, listing and qualifications fees, printers, fees and expenses
of the Company’s counsel and accountants (including legal fees of Investor’s counsel associated with the review of each Registration
Statement).
6. INDEMNIFICATION.
With respect to Registrable Securities
which are included in a Registration Statement under this Agreement:
(a) To
the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold harmless and defend the Investor, the directors,
officers, partners, employees, agents, representatives of, and each Person, if any, who controls the Investor within the meaning of the
Securities Act or the Exchange Act (each, an “Indemnified Person”), against any losses, claims, damages, liabilities,
judgments, fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or several
(collectively, “Claims”) incurred in investigating, preparing or defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or governmental, administrative or other regulatory agency, body
or the SEC, whether pending or threatened, whether or not an indemnified party is or may be a party thereto (“Indemnified Damages”),
to which any of them may become subject insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a material fact in a Registration Statement
or any post-effective amendment thereto or in any filing made in connection with the qualification of the offering under the securities
or other “blue sky” laws of any jurisdiction in which Registrable Securities are offered (“Blue Sky Filing”),
or the omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein
not misleading; (ii) any untrue statement or alleged untrue statement of a material fact contained in any final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement thereto with the SEC) or the omission or alleged omission to
state therein any material fact necessary to make the statements made therein, in light of the circumstances under which the statements
therein were made, not misleading; or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act,
any other law, including, without limitation, any state securities law, or any rule or regulation there under relating to the offer or
sale of the Registrable Securities pursuant to a Registration Statement (the matters in the foregoing clauses (i) through (iii) being,
collectively, “Violations”). The Company shall reimburse the Investor and each controlling person promptly as such
expenses are incurred and are due and payable, for any legal fees or disbursements that are reasonably incurred by them or other reasonable
expenses incurred by them in connection with investigating or defending any such Claim. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company
by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement or any such amendment thereof
or supplement thereto; (y) shall not be available to the extent such Claim is based on a failure of the Investor to deliver or to cause
to be delivered the prospectus made available by the Company, if such prospectus was timely made available by the Company pursuant to
Section 3(b); and (z) shall not apply to amounts paid in settlement of any Claim if such settlement is effected without the prior written
consent of the Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Indemnified Person.
8
(b) In
connection with a Registration Statement, the Investor agrees to indemnify, hold harmless and defend, to the same extent and in the same
manner as is set forth in Section 6(a), the Company, each of its directors, each of its officers, employees, representatives, or agents
and each Person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act (each an “Indemnified
Party”), against any Claim or Indemnified Damages to which any of them may become subject, under the Securities Act, the Exchange
Act or otherwise, insofar as such Claim or Indemnified Damages arise out of or is based upon any Violation, in each case to the extent,
and only to the extent, that such Violation occurs (i) in reliance upon and in conformity with written information furnished to the Company
by the Investor expressly for use in connection with such Registration Statement or (ii) from the Investor’s violation of any prospectus
delivery requirements under the Securities Act, the Exchange Act, any other law, including, without limitation, any state securities law,
or any rule or regulation there under relating to the offer or sale of the Registrable Securities pursuant to a Registration Statement;
and, subject to Section 6(d), such Investor will reimburse any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such Claim; provided, however, that the indemnity agreement contained in this Section 6(b) and the agreement
with respect to contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be unreasonably withheld, conditioned or delayed; provided,
further, however, that, absent fraud or gross negligence, the Investor shall be liable under this Section 6(b) for only that amount of
a Claim or Indemnified Damages as does not exceed the net proceeds to such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full force and effect regardless of any investigation made by
or on behalf of such Indemnified Party. Notwithstanding anything to the contrary contained herein, the indemnification agreement contained
in this Section 6(b) with respect to any prospectus shall not inure to the benefit of any Indemnified Party if the untrue statement or
omission of material fact contained in the prospectus was corrected and such new prospectus was delivered to the Investor prior to such
Investor’s use of the prospectus to which the Claim relates.
(c) Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party
so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof with counsel reasonably
mutually satisfactory to the indemnifying party and the Indemnified Person or the Indemnified Party, as the case may be; provided, however,
that an Indemnified Person or Indemnified Party shall have the right to retain its own counsel with the fees and expenses of not more
than one (1) counsel for such Indemnified Person or Indemnified Party to be paid by the indemnifying party, if, in the reasonable opinion
of counsel retained by the indemnifying party, the representation by such counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such proceeding. The Indemnified Party or Indemnified Person shall cooperate
fully with the indemnifying party in connection with any negotiation or defense of any such action or claim by the indemnifying party
and shall furnish to the indemnifying party all information reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the Indemnified Party or Indemnified Person fully apprised at all times
as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior written consent; provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party shall, without the prior written consent of the Indemnified
Party or Indemnified Person, which consent shall not be unreasonably withheld, conditioned or delayed, consent to entry of any judgment
or enter into any settlement or other compromise which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the indemnifying party shall be subrogated to all rights of the Indemnified Party or Indemnified
Person with respect to all third parties, firms or corporations relating to the matter for which indemnification has been made. The failure
to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve
such indemnifying party of any liability to the Indemnified Person or Indemnified Party under this Section 6, except to the extent that
the indemnifying party is prejudiced in its ability to defend such action.
9
(d) The
indemnification required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(e) The
indemnity agreements contained herein shall be in addition to (i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.
7. CONTRIBUTION.
To the extent any indemnification
by an indemnifying party is prohibited or limited by law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the fullest extent permitted by law; provided, however, that:
(i) no seller of Registrable Securities guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any seller of Registrable Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.
8. REPORTS UNDER THE EXCHANGE ACT.
With a view to making available
to the Investor the benefits of Rule 144 promulgated under the Securities Act or any similar rule or regulation of the SEC that may at
any time permit the Investor to sell securities of the Company to the public without registration, and as a material inducement to the
Investor’s purchase of the Common Shares, the Company represents, warrants, and covenants to the following:
(a) The
Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and has filed all required reports under section
13 or 15(d) of the Exchange Act during the 12 months prior to the date hereof (or for such shorter period that the issuer was required
to file such reports).
(b) During
the Registration Period, the Company shall file with the SEC in a timely manner all required reports under section 13 or 15(d) of the
Exchange Act (it being understood that the filings prior to any permitted filing deadline extension under Rule 12b-25 under the Exchange
Act shall be deemed timely and it being further understood that nothing herein shall limit the Company’s obligations under the Purchase
Agreement) and such reports shall conform to the requirement of the Exchange Act and the SEC for filing thereunder.
(c) The
Company shall furnish to the Investor so long as such Investor owns Registrable Securities, promptly upon request, (i) a written statement
by the Company that it has complied with the reporting requirements of Rule 144, (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested
to permit the Investor to sell such securities pursuant to Rule 144 without registration following the required holding period pursuant
to Rule 144.
10
9. AMENDMENT OF REGISTRATION RIGHTS.
Provisions of this Agreement may
be amended and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively),
only with the written consent of the Company and the Investor. Any amendment or waiver effected in accordance with this Section 9 shall
be binding upon each of the Investor and the Company. No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of this Agreement unless the same consideration also is offered to all of the parties to
this Agreement.
10. MISCELLANEOUS.
(a) A
Person is deemed to be a holder of Registrable Securities whenever such Person owns or is deemed to own of record such Registrable Securities
or owns the right to receive the Registrable Securities. If the Company receives conflicting instructions, notices or elections from two
or more Persons with respect to the same Registrable Securities, the Company shall act upon the basis of instructions, notice or election
received from the registered owner of such Registrable Securities.
(b) Any
notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must be in writing
and will be deemed to have been delivered pursuant to the notice provisions of the Purchase Agreement or to such other address and/or
electronic mail address and/or to the attention of such other person as the recipient party has specified by written notice given to each
other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) electronically generated by the sender’s email service provider containing the
time, date, and recipient email or (C) provided by a courier or overnight courier service shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance with this Section 10(b).
(c) Failure
of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
(d) The
laws of the State of Nevada shall govern all issues concerning the relative rights of the Company and the Investor as its stockholder.
All other questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the internal
laws of the State of Nevada, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of
Nevada or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Nevada. Each
party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City of Las Vegas, Clark
County, State of Nevada, for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address for
such notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. If any
provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect
the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision
of this Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A
JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
11
(e) This
Agreement shall inure to the benefit of and be binding upon the permitted successors and assigns of each of the parties hereto.
(f) The
headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
(g) This
Agreement may be executed in identical counterparts, both of which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party. Facsimile or other electronically scanned and delivered
signatures (including any electronic signature covered by the U.S. federal ESIGN Act of 2000, Uniform Electronic Transactions Act, the
Electronic Signatures and Records Act or other applicable law, e.g., www.docusign.com), including by e-mail attachment, shall be deemed
to have been duly and validly delivered and be valid and effective for all purposes of this Agreement.
(h) Each
party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such
other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
(i) The
language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of
strict construction will be applied against any party.
(j) This
Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
12
IN WITNESS WHEREOF, the
Company and the Investor have caused their signature page to this Registration Rights Agreement to be duly executed as of the date first
above written.
COMPANY:
SADOT GROUP INC.
By:
Name:
Title:
INVESTOR:
[•]
By:
Name: [•]
Title: [•]
[Signature Page to Registration Rights Agreement
(Equity Purchase Facility Agreement)]
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v3.26.1
Cover
Jul. 14, 2026
Cover [Abstract]
Document Type
8-K
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false
Document Period End Date
Jul. 14, 2026
Current Fiscal Year End Date
--12-31
Entity File Number
001-39223
Entity Registrant Name
SADOT
GROUP INC.
Entity Central Index Key
0001701756
Entity Tax Identification Number
47-2555533
Entity Incorporation, State or Country Code
NV
Entity Address, Address Line One
295 E. Renfro Street
Entity Address, Address Line Two
Suite 300
Entity Address, City or Town
Burleson
Entity Address, State or Province
TX
Entity Address, Postal Zip Code
76028
City Area Code
(832)
Local Phone Number
604-9568
Written Communications
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Pre-commencement Tender Offer
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